Preamble

The House met at half-past Two o'clock

PRAYERS

MR. SPEAKER in the Chair]

Royal Assent

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts and a measure:

1. Duchy of Lancaster Act 1988.
2. Regional Development Grants (Termination) Act 1988.
3. Merchant Shipping Act 1988.
4. British Railways Order Confirmation Act 1988.
5. Saint Bennett Fink Burial Ground (City of London) Act 1988.
6. Church Commissioners (Assistance for Priority Areas) Measure 1988.

PRIVATE BUSINESS

BRIGHTON AND PRESTON CEMETERY BILL

Considered; to be read the Third time.

Oral Answers to Questions — EMPLOYMENT

Labour Statistics

Mr. Amess: To ask the Secretary of State for Employment what has been the rate of the fall in unemployment in the last 12 months in the United Kingdom.

Mr. Ian Taylor: To ask the Secretary of State for Employment if he will make a statement on the number of people currently unemployed; and what are the comparable figures for 12 months ago.

The Secretary of State for Employment (Mr. Norman Fowler): In March 1988, seasonally adjusted adult unemployment in the United Kingdom was 2,505,000, a fall of 532,500 over the past 12 months. Unemployment has now fallen consistently for 20 months, by 706,000, the largest sustained fall on record.

Mr. Amess: Is my right hon. Friend aware that unemployment in Basildon has practically halved since 1983? In fact, it has fallen so much that the Socialist-inspired unemployment board has fallen down. Does my right hon. Friend agree that that dramatic fall reflects great credit on the local jobcentres, the enterprise of local businesses and, above all, the success of the Government's policies?

Mr. Fowler: I entirely agree. Above all, it shows the strength of the economy and the fact that new jobs are now being created at an unprecedented rate.

Mr. Taylor: Will my right hon. Friend confirm that long-term unemployment has fallen, from January 1987 to January 1988, by 234,000? Will he also confirm that that shows the complete success of the job creation and training measures introduced by the Government? Will he condemn those unions that are not co-operating in full to reduce further the number of unemployed?

Mr. Fowler: Yes, indeed. There was a fall of about 234,000 over those 12 months in long-term unemployment—that is unemployment of more than 12 months. That is the biggest 12-month fall on record. There was also a record fall of about 365,000 over those 12 months in longer-term unemployment—that is unemployment of more than six months. That shows the Government's commitment to reducing unemployment and the success of their policies.

Mr. Duffy: The Secretary of State did not mention the continuing slowing down of numbers of people leaving the jobless queues. Contrary to what his hon. Friend the Member for Basildon (Mr. Amess) said, is he aware that, in its latest business trend survey, the Sheffield Engineering Employers Association reports that three times as many firms show no improvement, or even a worsening of the numbers of employees, as show an improvement?

Mr. Fowler: There are some special factors associated with Sheffield business which are not the responsibility of


Government. Unemployment is falling in all regions. One of the areas in which it has come down fastest over the past 12 months is Yorkshire and Humberside.

Mr. Skinner: Will the Secretary of State give a guarantee that, during the remainder of this Parliament, the unemployment figures will continue to fall? Will he tell the House and those outside why, when unemployment is rising the Government say that it has little or nothing to do with their policies, but when unemployment is falling during an election boom, they claim the credit?

Mr. Fowler: As the hon. Gentleman knows, the strength of the economy is one of the real reasons why unemployment is falling and new jobs are being created. There is no doubt about that. I see no reason why unemployment should not continue to fall. I shall not put a figure on that, but the most significant point for the hon. Gentleman is that unemployment has fallen, not just over one, two or three months, but for each of the past 20 months. That is the Government's record.

Mr. Beaumont-Dark: Does my right hon. Friend accept that one of the most encouraging things for the west midlands, which have suffered under the necessary economic changes, is that only 370 redundancies have been announced, whereas 7,400 new jobs have been created, proving that at long last, in spite of the problems that we have suffered, the midlands are on their way again? Does he agree that, provided the pound stays stable, we have a chance of that record going on and on?

Mr. Fowler: There is no doubt that the midlands, and the west midlands in particular, are very much on their way again. The west midlands have shown the largest decrease of all the regions in the rate of unemployment over the past 12 months.

Mr. Meacher: Is the Secretary of State aware that, cutting out the Government's 20 fiddles of the unemployment figures, the true figure for unemployment in Britain today is 3,305,000? Is he not ashamed that that figure is still almost three times higher than that which the Government inherited in 1979, and higher at 11·9 per cent. than in any other major Western country, except for Spain and Italy? Finally, is he not ashamed that, even where jobs have been created, they have been overwhelmingly low-pay, low-skill, part-time jobs with no future?

Mr. Fowler: The hon. Gentleman, even by his own standards, is being extremely foolish in everything that he has said. Literally every point that he has just made is untrue and does not coincide with the facts. The labour force survey shows that the unemployment position is, if anything, understated. In other words, it shows a better rather than a worse unemployment position.
The position in respect of part-time jobs is not as the hon. Gentleman says. It is about half full-time and half part-time jobs. Those are the figures for the past 12 months. During the general election the hon. Gentleman and his predecessor said that when the election was over unemployment would go up again but since the election unemployment has come down by almost 420,000.

Mr. Ward: To ask the Secretary of State for Employment what information he has on comparable unemployment figures for France, Italy, Belgium, Holland and the United Kingdom.

Mr. Fowler: The latest figures show that unemployment in the United Kingdom is lower than in France, Italy, Belgium and the Netherlands. It is also lower than in Spain and Ireland. Over the past year the unemployment rate in the United Kingdom has fallen faster than in any other industrial country.

Mr. Ward: I thank my right hon. Friend for that reply. At the risk of upsetting the Opposition further with more good news, will he confirm that average employment in the United Kingdom is higher as a proportion than that of any of our EEC partners? Is he prepared to give the figures for those under 25 who are unemployed?

Mr. Fowler: I agree with my hon. Friend. The hon. Member for Oldham, West (Mr. Meacher) appears to have a vested interest in high unemployment, not low unemployment.
With regard to the under-25s, the latest comparison shows that the United Kingdom has 14·5 per cent. unemployed compared with a European Community average of 20·6 per cent.

Mrs. Fyfe: Is the Minister aware that the bulk of the growth in employment over recent months has been in East Anglia, the south-west, the south-east and the midlands, and that the percentage increase in Scotland is precisely 0·1 per cent.? Will he comment on the position in Glasgow, Maryhill where unemployment is currently, 29 per cent., the position has not improved recently and there is precious little private sector investment?

Mr. Fowler: Unemployment has come down in all regions. That is not to say that there are not areas where we want unemployment to come down even further and I believe that it will. It is inaccurate for the hon. Lady to say that the fall is confined to London and the south-east. The significance of the figures for the past 18 to 20 months is that unemployment has come down literally in every region.

Dame Elaine Kellett-Bowman: Will my right hon. Friend confirm what the Minister with responsibility for tourism was good enough to say in Lancaster on Thursday namely, that there is a tremendous spin-off from service jobs to manufacturing jobs? Will he also confirm that places which make their service industries thrive also have thriving manufacturing industries? The continentals have known that for years, and we are only just beginning to learn it.

Mr. Fowler: My hon. Friend is absolutely correct. Service jobs in tourism, banking or computing have shown some of the biggest increases over past months. These are real jobs. As my hon. Friend has said, in many cases there is a spin-off for manufacturing industry supplying those service industries.

Youth Employment (Leicester)

Mr. Vaz: To ask the Secretary of State for Employment what steps he proposes to take to boost youth employment prospects in Leicester.

The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): The employment prospects for young people in Leicester, as elsewhere, are being boosted by the high quality training and work experience offered by YTS. From September the Government are


extending their guarantee of a YTS place to all 16 and 17-year-olds who are not in work or further education. As a result, no young person under 18 need be unemployed.

Mr. Vaz: Is the Minister aware of the existence of the Leicester enterprise board, which was established by Leicester city council, whose guidelines include promoting youth employment and providing grants to local business men? Does he agree that one way to boost the prospects for youth employment in Leicester would be for the Government to provide the local authority with resources to allow it to continue its valuable and important work?

Mr. Lee: As the hon. Gentleman is aware, substantial amounts of Government money are directed to Leicester for programmes, including the inner city task force. About 80 per cent. of young people leaving YTS in Leicester enter jobs, further training or education against 75 per cent. nationally. Leicester is not doing too badly.

Mr. Latham: is my hon. Friend aware that in the city of Leicester and in Leicestershire county, including my constituency, there are many excellent youth training schemes and that they are training young people very well? There is no reason why any young person should not get training and go on to decent employment.

Mr. Lee: I am grateful for my hon. Friend's comments. He is absolutely right. There are some excellent schemes, not only in Leicestershire, but in the whole country.

Labour Statistics

Mr. Knowles: To ask the Secretary of State for Employment what has been the rate of change in unemployment levels in the last 12 months in the east midlands.

The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls): In the year to March, seasonally adjusted adult unemployment in the east midlands fell by 33,400, or nearly 18 per cent.

Mr. Knowles: I thank my hon. Friend for his reply. Will he confirm that in Nottingham, East, which covers a large part of the inner city of Nottingham, unemployment has fallen by 13 per cent. in the past year? Can he quantify the rise in unfilled job vacancies that have been registered?

Mr. Nicholls: My hon. Friend is entirely correct in what he says about his constituency. Unemployment in the Nottingham travel-to-work area has fallen by more than 7,000–16 per cent.—in the year to March 1988. Vacancies notified to jobcentres in the east midlands region are up by 21·7 per cent. for the year ended March 1987, and they are up by 20·3 per cent. in the Nottingham travel-to-work area over the same period.

Mr. Ashton: That is certainly not the case in the rest of Nottinghamshire. Is the Minister aware that in my coal mining area of Bassetlaw unemployment has not fallen at all but remains at 14 or 15 per cent. ? When will the Government have a proper regional policy in coal mining areas, where there has been a devastating increase in unemployment over the past few years and where very few new jobs are being created?

Mr. Nicholls: If the hon. Gentleman wishes to talk about the coal mining industry as such, he will know that the Government have pumped substantial sums of money

into mining generally. As to the redundancies that have occurred, the Government have put a considerable amount of money into British Coal Enterprise Ltd. to try to help people through those redundancies. The hon. Gentleman cannot avoid the fact that if he considers the region and unemployment there as a whole he will find that the figures are as I have stated them to be, and they should give even his unemployed constituents considerable hope.

Mr. Brandon-Bravo: It is true that the east midlands region is one of great opportunity, but I am sure my hon. Friend is aware that there remain some sad pockets of severe unemployment. I draw to his attention the 19,500 people who remain unemployed in the city of Nottingham, which is, after all, at the centre of a very prosperous region. Will my hon. Friend, when considering travel-to-work statistics, ensure that they do not disguise still-stubborn pockets of unemployment?

Mr. Nicholls: My hon. Friend is correct. It is obvious that within a general pattern of figures specific areas will take longer to emerge from the recession with which the Government have had to cope.
If my hon. Friend is concerned about current Government aid, I can tell him that since 1979 £98·7 million has been ploughed into the east midlands, of which Corby has had £71·9 million. Although we realise—n the way that the Opposition do not—hat the answer to all the world's woes is not to pour in Government money, in so far as that plays a proper part in the dimension of the problem, the Government have been playing their part.

Jobcentres

Mr. Kennedy: To ask the Secretary of State for Employment if he has any plans to extend the range of practical facilities available in jobcentres for use by the unemployed; and if he will make a statement.

Mr. Lee: The setting up of the employment service brought jobcentres and unemployment benefit offices under a common management. We are now undertaking a series of pilot studies across the country to test various approaches and integrating the range of services offered locally by the employment service. Our aim is to provide better and more coherent help to unemployed people.

Mr. Kennedy: I thank the Minister for that reply. I make the plea to him that when those reviews are undertaken he should bear in mind the specific problem of additional overheads which unemployed people face when pursuing available employment in areas such as the Highlands of Scotland. I quote, for example, employment in the offshore oil industry, which is often advertised in Aberdeen. This creates special problems for the unemployed person telephoning or trying to visit Aberdeen for a job interview. Will the Minister bear such factors in mind when making his review?

Mr. Lee: We shall certainly take into account all the problems that the hon. Gentleman raises, as well as specific problems that arise in rural areas, including the Highlands. In 1982–83 we offered a free telephone service to job seekers. Frankly, it was not a popular scheme and was subject to some abuse, so the service was withdrawn. Jobcentre staff are there to make telephone calls to prospective employers on behalf of those who are unemployed.

Mr. Rowe: Does my hon. Friend accept that in areas such as Mid-Kent, where unemployment is falling very steeply, there may be a temptation, perfectly properly, to cut jobcentre staff, but that many of the people who now need help in finding employment through jobcentres are harder to place and require more counselling and assistance? Will he take those considerations into account when reviewing overall staffing facilities?

Mr. Lee: My hon. Friend is absolutely right. We are trying to improve and upgrade our service wherever possible. We have about 40,000 permanent staff employed at jobcentres and unemployment benefit offices across the country.

Mr. Meacher: Is the Minister aware that the latest change in the availability for work rules introduced last week will reduce the unemployment figures by, it is estimated, about 50,000 in a full year? Is that not typical of the changes by which the dole figures have been artificially reduced by the Government? If one takes into account all the changes brought about by restart and the availability for work rules, is not at least half the drop in unemployment claimed by the Government explained by such artificial devices?

Mr. Lee: I think that my right hon. Friend the Secretary of State has dealt with the ridiculous points that the hon. Gentleman is making, and there is no need for me to add in reply to them.

Mrs. Gorman: Will my right hon. Friend accept my congratulations on having identified at least 500 people who, it was announced at the weekend, had been defrauding the social security system by claiming benefit while in employment? Will he accept my wish that he will continue to prosecute that wing of the population? Does he agree that it would be right to bring all those people to justice by taking them to court, just as a small business man who is not registered by the Data Protection Act 1984 will be prosecuted simply for not filling up a form?

Mr. Lee: Conservative Members are, of course, anxious to ensure that those who are genuinely entitled to employment benefit, and welfare benefits generally, receive them. We are, however, determined to stamp out fraud and abuse, and there have been a number of very successful campaigns recently, including the one mentioned by my hon. Friend.

Training Initiatives

Mr. Ron Davies: To ask the Secretary of State for Employment what training initiatives his Department currently supports specifically for rural areas.

Mr. Nicholls: Our training programmes are available nationally to all those who are eligible, irrespective of where they live. The planning and delivery arrangements ensure that all programmes respond to particular local needs.

Mr. Davies: Has the Minister considered the particular problems that will be faced by those who are eligible for the new employment training scheme in rural areas, particularly as a result of the high cost of transport? If the scheme is not to become a conscript scene in the countryside, does the Minister accept that it must be made

more attractive? One way of doing that would be to abolish the £5 travelling cost threshold and at least make all travelling costs free for the applicant.

Mr. Nicholls: I appreciate the hon. Gentleman's point. Under the new training programme, travelling costs in excess of £5will be met. I hope the hon. Gentleman agrees that that is a proper way to proceed. In view of the economic climate generally, and, indeed, the various training programmes that are available, I am sure that he would wish to point out that such programmes have already been particularly successful in his constituency. In the year to March 1988 unemployment fell by 19 per cent. and in the year to January 1988 the number of people under 25 out of work for more than six months fell by 34 per cent. I know how much the hon. Gentleman will welcome that, and I join him in doing so.

Sir John Farr: With the complete change in agriculture and its outlook for the future, will my hon. Friend look into the prospect of modernising the youth training scheme in so far as it affects agriculture and the changing face of the business?

Mr. Nicholls: I am certainly very much aware that YTS has played a major part in the agriculture industry, as it has elsewhere. However, it is fair to point out that nothing is ever set in tablets of stone. If schemes and training can be improved, those are obviously matters that we tend to consider. I can give my hon. Friend an assurance that improving the quality of training is constantly borne in mind.

Mr. Sheerman: I realise that the Minister is an expert on rural unemployment, but is he not concerned about trends that are occuring in youth training in rural and other areas? I had evidence only today of a scheme run by a manufacturer in Wiltshire, which is offering £92 a week to young people with no training to come into the industry. Is the Minister aware that that will mean the collapse of youth training in this country, with young people at the age of 16 again going into occupations with no future, training or prospects? What does he propose to do about that collapse?

Mr. Nicholls: I am pleased to hear the hon. Gentleman's tacit, if not explicit, support for training programmes in general, and the adult training programme in particular. It should be pointed out that not so many years ago, as a result of the policies of the Labour Government, there would not have been even unskilled jobs for people to go into, because unemployment was rising. At present, it is falling. Even if the hon. Gentleman is a late convert to the Government's policies, the sinner who has repented is welcome.

Mr. Harris: Will my hon. Friend confirm that in the county of Cornwall unemployment in rural development areas has fallen by 2·9 per cent in 12 months, which is the third largest drop in any English county? Following his visit to Cornwall on Friday, does my hon. Friend agree that the two biggest drawbacks that we face in dealing with unemployment—because the economy is now picking up—are first, a shortage of industrial land, and, secondly, the demand for more skill training?

Mr. Nicholls: I am sure that my hon. Friend is right. It needs to be stressed repeatedly that the new adult training programme has a vital role to play and that it deserves


support from both sides of the House. As we both come from country constituencies, we have the advantage of knowing what we are talking about.

Fair Employment Monitoring

Rev. Martin Smyth: To ask the Secretary of State for Employment whether he plans to introduce fair employment monitoring in Great Britain; and if he will make a statement.

Mr. Nicholls: No, Sir.

Rev. Martin Smyth: If there is a need for such a system in Northern Ireland, why does the Minister consider that it is not needed here, in view of the report by the Commission for Racial Equality and the Select Committee on Employment's paper "Discrimination in Employment"? Or does the Minister accept that employment should be provided only on grounds of merit?

Mr. Nicholls: I understand the hon. Gentleman's point, and I fully appreciate his anxiety and sincerity, but the situation in Northern Ireland is unique. Northern Ireland is a unique part of the United Kingdom, and, unfortunately, from the hon. Gentleman's point of view, unique remedies have to be applied to it. Therefore, while the system is appropriate in Northern Ireland, we see no reason to extend it to the mainland.

Mr. Marlow: Was the absurd nonsense that is currently proposed for Northern Ireland in our election manifesto? Some of my hon. Friends would not wish to vote against something that had been in our election manifesto.

Mr. Nicholls: My hon. Friend knows that if he wishes to take up specific points of policy relating to Northern Ireland he should take them up with our right hon. Friend the Secretary of State for Northern Ireland. I do not think that I shall give in to the temptation of being led down the road of considering election manifestos and what conclusions one should draw from them, but I am grateful to my hon. Friend for teasing me.

Mr. Nellist: Given the monitoring of employment that is carried out by the Minister's Department, to which the hon. Member for Billericay (Mrs. Gorman) referred a few minutes ago, and the allegations in today's editions of The Guardian, The Times, The Daily Telegraph and the sewer press by the Secretary of State about the claiming of unemployment benefit by my constituents in Coventry and the west midlands, what about the other side of the coin? How many officers at the jobcentres are employed by his Department to ensure that every unemployed person gets his full entitlement to benefit? What is his Department's advertising budget to ensure a full and fair take-up of employment benefit? [Interruption.] If allegations are to be made in the Chamber about unemployed workers moonlighting, which activity is not surprising given the poverty level of benefits, I can only says that when every Tory Member of Parliament has only one job—[Interruption]—it will be a little less hypocritical of them to lecture working-class people about moonlighting.

Mr. Nicholls: It clearly falls to me to welcome the hon. Gentleman back to our deliberations. From the welcome that he received from this side of the House, he will have gathered that he is a long-standing favourite with me and my right hon. and hon. Friends. The pity is that being a

long-standing favourite does not mean that he talks any sense. It is perfectly obvious that his recent holiday from our deliberations has not helped him.
We owe it to those who pay tax and make the contributions that fuel the social security budget to ensure that that money is properly directed. If the hon. Gentleman comes to the House to give credit and credence to those who are prepared to defraud the system, he bears a heavy responsibility.

Labour Statistics

Mr. Sackville: To ask the Secretary of State for Employment if he will make a statement on the number of job vacancies registered at jobcentres.

Mr. Fowler: In March the number of unfilled vacancies at jobcentres in the United Kingdom, seasonally adjusted and excluding community programme vacancies, was 245,500, an increase of 15 per cent. compared with a year ago.

Mr. Sackville: Will my right hon. Friend join me in congratulating the staff of the Bolton, Westhorton and Norwich jobcentres on their efforts during the past 12 months, during which unemployment in my constituency has fallen by 735? Does he agree that the very welcome rise in the number of vacancies registered at those jobcentres does not reflect the full picture? Will he give any information that he has about the number of vacancies in the economy as a whole?

Mr. Fowler: I join my hon. Friend in congratulating the Bolton office, with which my Parliamentary Private Secretary keeps me in touch. We estimate that there are about 700,000 vacancies in the economy. In other words, the vacancies at jobcentres represent only about one third of the total number of vacancies.

Mr. Barry Jones: Will the right hon. Gentleman consider how he might help the many thousands of steel workers who lost their jobs as long ago as 1980 under the closure programme, many of whom left school early and have no skills? One of my constituents has been out of work for many years and has found it necessary to travel to London to find work, and go home about every 10 days. This is a serious matter. He is an industrial gypsy. Will the right hon. Gentleman not be complacent, and say how such men will find work?

Mr. Fowler: I am prepared to look at the case that the hon. Gentleman has put to me. I hope that he in turn will back all the Government's moves to improve adult training. Only if we are able to provide the long-term unemployed with skills through training will they be able to take up the vacancies that are increasingly occurring.

British Nuclear Fuels plc

Mr. Page: To ask the Secretary of State for Employment how many tourists visited British Nuclear Fuels plc at Sellafield in 1987.

Mr. Lee: The British Nuclear Fuels site at Sellafield attracted over 104,000 visitors in 1987.

Mr. Page: I thank my hon. Friend for that reply. Does he agree that such a large figure is a tribute to British Nuclear Fuels plc in promoting its tourism, and are there


any plans to expand that for 1988? As a general knowledge of industry is obviously beneficial, has my hon. Friend any plans to bring the experience of British Nuclear Fuels plc to other industries and companies?

Mr. Lee: British Nuclear Fuels plc is opening a new £5 million visitors centre on 6 June, at which His Royal Highness The Duke of Edinburgh will officiate. On my hon. Friend's general point, he will, I hope, know that the encouragement of modern industrial tourism is a personal crusade of mine. We are to hold a major conference at Centre Point in September, to be hosted by the CBI, in which the English Tourist Board will participate, to try to encourage more firms to open themselves up to visitors.

Employer-School Compacts

Mr. David Evans: To ask the Secretary of State for Employment how many proposals he has received to date for employer-school compacts; and if he will make a statement.

Mr. Norman Fowler: There has been a good response to my announcement that the Government will back compacts between schools and employers in urban programme areas. I understand that about 40 partnerships are working on the preparation of a compact. The Manpower Services Commission is today launching a formal invitation to all 57 urban programme areas to apply for development funding. We hope initially to launch some 15 compacts throughout Britain and the Government are making available over £3 million a year for this initiative.

Mr. Evans: I welcome my right hon. Friend's initiative to guarantee YTS training and jobs for young people, particularly in inner cities, and I am pleased that he is making resources available for this programme.

Mr. Fowler: I am grateful to my hon. Friend for his comments. Under the compact arrangements employers will be asked to guarantee a job, with training, to young people from inner-city schools, and I hope that on this we can take the Opposition with us.

Adult Training Programme

Mr. Jacques Arnold: To ask the Secretary of State for Employment how many representations he has received on his plans for the new adult training programme; and if he will make a statement.

Mr. Norman Fowler: I have received a large number of representations about the employment training programme. The programme will go ahead in September on the basis of the unanimous recommendations of the Manpower Services Commission. It will have a budget of nearly £1·5 billion and be able to provide training for up to 600,000 unemployed people each year.

Mr. Arnold: Will my right hon. Friend join me in deploring the decision by many unions not to co-operate with the training schemes and, in some cases, to obstruct them? Does he agree with a Transport and General Workers Union branch secretary who has written to say:
We cannot just say we are going to wash our hands"——

Mr. Speaker: Order. No quotations, please. It should be paraphrased.

Mr. Fowler: This programme was proposed unanimously by the Manpower Services Commission, on which are three trade union commissioners, including Ron Todd. I hope that in the light of that the trade unions will back this programme, because they have been part of the authorship of it.

Mr. Leyton: Will the Secretary of State consider carefully two of the recommendations that he will have had? Under existing programmes employers can chop up the low training allowance, whereas under the new programme anything over £5 is clawed back by the DHSS. Surely that is perverse and unhelpful, and could he alter it? Secondly, the child care allowance is in itself welcome, but the right hon. Gentleman will know that it is available only for those who can claim unemployment pay for six months, and that means that they have to be available for work. There is a Catch 22 situation. Could he not make the allowance available to all parents who wish to go on the scheme?

Mr. Fowler: I shall look at any of the details of the programme and seek to be as helpful as we conceivably can. I hope that in return the hon. Gentleman, with his long experience of employment matters, will back the major programme that we are putting forward, which will provide training for 600,000 unemployed persons. It would be a great tragedy if he and the trade unions turned their backs on that prospect.

Mr. Holt: Given the success of the training schemes, what proposals do the Government have, particularly in the light of the success of the television advertising of job vacancies in the north of England, at my request—that is the good thing—for assisting with the re-location of people who, having undergone training and acquired new skills, can find no jobs in the locality and wish to go to other parts of the country?

Mr. Fowler: We shall consider that, but the major issue here is that there are many vacancies in the regions, as shown by the vacancies statistics. Someone does not have to travel from north to south to find a job. The vacancies are often there in the region, provided that people have the skills to fill them. The whole point of the employment training programme is to provide skills for unemployed people.

Ms. Short: Has the Secretary of State received representations on the new adult training scheme—or ET, as we are now told to call it—from Windsor, Kensington and Chelsea, Maidenhead and Fylde, which are all Tory local authorities which have decided to boycott the scheme because, they say, it is so under-funded?

Mr. Fowler: I have noted those councils, and if that is the case I hope that they will reconsider their position. What is needed is that people, and particularly the hon. Lady, should stop seeking to sabotage a training programme whose major purpose is to bring unemployed people back into employment.

Mr. Favell: Has my right hon. Friend read recent press speculation that the TUC might seek to destroy the new


training scheme? Can it really be that the TUC would show such callous disregard for 600,000 long-term unemployed people?

Mr. Fowler: I agree with my hon. Friend. It cannot be stated too often that the proposals which the hon. Member for Birmingham, Ladywood (Ms. Short) is seeking to sabotage are the product of the Manpower Services Commission, on which there are three trade union commissioners, led by Ron Todd. That being so, I very much hope that not only the TUC, but the Labour party, too, will reconsider their destructive attitude.

Ethnic Monitoring

Mr. Janner: To ask the Secretary of State for Employment whether he is satisfied with the implementation in the private sector of the recommendations of the Commission for Racial Equality concerning ethnic monitoring.

Mr. Nicholls: Progress is being made. The indications from recent visits to major private sector employers by the Department's race relations employment advisory service are that one third have introduced, or are considering introducing, ethnic monitoring.

Mr. Janner: Does the Minister accept the unanimous view of the Employment Committee that discrimination against people because they are black is rampant and rife throughout private industry? Does he not know that people are not treated equally—that is all that anyone asks—and that the ethnic monitoring rules in the code are not being complied with? Why is he not prepared to take action when he has just admitted that the vast majority of private industries have not complied with the code?

Mr. Nicholls: I do not accept that analysis, and I am surprised that the hon. and learned Gentleman accepts it. The Government's commitment against racial discrimination is total, and the hon. and learned Gentleman knows that.
Let me give the hon. and learned Gentleman some of the good news, because he seems to wish to concentrate on the bad news. If he considers his own city of Leicester, he will know that, on the advice of the Department's advisory service, five of the 11 major public and private employers in Leicester have introduced ethnic monitoring. A great deal of good work is being done. It is a pity that the hon. and learned Gentleman does not concentrate on that, instead of trying to pretend that things are as bad as he suggests.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Harry Greenway: To ask the Prime Minister if she will list her official engagements for Tuesday 3 May.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

Mr. Greenway: I warmly congratulate my right hon. Friend on embarking today upon her 10th year as Prime Minister, and wish her many more.
Given general doubts about the credibility of the Thames Television "This Week" programme on the Gibraltar shooting, does my right hon. Friend agree that there must be grave doubts about the ability of the Independent Broadcasting Authority to control the programme, in which troops were tried and convicted on the basis of very dubious evidence?

The Prime Minister: I thank my hon. Friend for his congratulations. I share his concern about the decision of the IBA to show a film before an inquest has been held. The report of the interdepartmental committee on the law of contempt as it affects tribunals of inquiry, which was chaired by Lord Salmon, stated:
One would not wish to see in this country the horror of trial by Press, Television and Radio … We have so far escaped them only because of a high sense of responsibility on the part of the Press, Television and Radio and also because of the law of contempt.
I agree with my hon. Friend that on this occasion neither Thames Television nor the IBA demonstrated that high sense of responsibility to which the judge referred.

Mr. Maclennan: If the Prime Minister takes time today to reflect on the forthcoming local elections, will she recognise that many people will regard them as an opportunity to register their strong opposition to her attempt to transfer all power over local services from local authorities to the Government? Will she state her willingness to arrest that anti-democratic process?

The Prime Minister: What the hon. Gentleman has said is just not so. Indeed, when I last answered a question on the subject I pointed out that we would not take control of education because I did not think it right that we should do so. Our purpose is to try to give as many people as possible—parents and governors—much more control over their children's education. I believe that that would be greatly to the benefit of children.
We wish to reform local government finance under the community charge, which in England will meet only one quarter of local government expenditure, and in Scotland will meet only one seventh of local government expenditure. The reform is designed to ensure that everyone in each country can judge the level of community charge, because the same level of services, delivered at the same level of efficiency, should result in the same level of community charge. That will give much more accountability.

Mr. Devlin: Does my right hon. Friend recall meeting, during her tour of Teesside, Mr. Eric Fletcher, the 35-year-old Middlesbrough man who threw 1,000 job applications at her, saying that he had not found a job? Was my right hon. Friend not surprised to read recently that Mr. Fletcher had found a full-time job? Will she give the same advice to others in a similar position?

The Prime Minister: I saw the news that Mr. Fletcher has a full-time job. I understand that he took my advice and undertook some excellent training, which enabled him to obtain a job. I congratulate him. I thank him for thanking me, which is a rare experience.

Mr. Hattersley: A moment ago the Prime Minister spoke of the importance of judging the results of the poll tax. Will she tell us why the Government refuse to publish


the figures that show the effect of the poll tax on individuals in England, when they have published the figures for Scotland and Wales?

The Prime Minister: As the right hon. Gentleman is aware, the actual figures for the poll tax will depend—[Interruption.] for the community charge. I call it the community charge.—[Interruption]

Mr. Speaker: Order. The Prime Minister.

The Prime Minister: The actual figures for the amount that will be paid to local authorities for their services will depend largely on their expenditure nearer the time.

Mr. Hattersley: If the right hon. Lady was able to overcome those difficulties, as well as her verbal confusion, for Scotland and Wales, why can she not do the same for England? Is it not a fact that if the truth about the poll tax were to be published by the Government before Thursday's election the Tory party would have to write off the English boroughs, in the same way as they have written off Wales and Scotland?

The Prime Minister: No. As the right hon. Gentleman knows, we are nearer the introduction of the community charge in Scotland than we are in England. If the community charge is very high, it is likely to be because of high or extravagant expenditure by Left-wing local authorities.

Mr. Hattersley: As the right hon. Lady persists in denying other people's figures, without daring to provide figures of her own, will she attempt a straight answer to a simple question? Is she saying "yes" or "no" to whether millions of men and women, including those in Tory boroughs, will pay more under the poll tax than they do under the rates? Will not millions of those men and women be among the low-income groups which have already been so grievously penalised by the Government?

The Prime Minister: Those who have hitherto paid nothing because they have paid no rates, will, of course, pay something towards the community charge—and so they should. The change is based upon equity, not upon gainers or losers. The real reason why the Opposition are fighting the community charge is that Left-wing authorities and councils will no longer be able to conceal the real cost of their policies.

Mr. Whitney: Will my right hon. Friend find time today to consider further changes in the housing benefit arrangements to take account of the fact that, following the probable sequestration of the assets of the National Union of Seamen, the hon. Members for Kingston upon Hull, East (Mr. Prescott)—[Interruption.]

Mr. Speaker: Order. The hon. Gentleman must not touch on sub judice matters.

Mr. Whitney: Will my right hon. Friend take account of the fact that the hon. Members for Kingston upon Hull, East and for Bolsover (Mr. Skinner) face the prospect of losing the advantage of their rental accommodation, at a reported weekly rent of £18?

The Prime Minister: I think that total expenditure is now about £5·3 billion for housing benefit, and the adjustments that have been made mean that we have it just about right.

Mr. Skinner: Is the Prime Minister aware that, rather than the funds of the National Union of Seamen being sequestrated because it is acting on principle against a cut in wages and an increase in hours of work, it is P and O that should have its funds sequestrated because of the Herald of Free Enterprise disaster at Zeebrugge? The sequestrated money could then be paid to the victims and the relatives of that awful disaster.

The Prime Minister: Sequestration is a matter for the courts, not for me, as the hon. Gentleman is well aware. I remind him that everyone has a right to go to his place of work without let or hindrance, and we shall uphold that right. With regard to the state of the dispute, I remind the hon. Gentleman that the parties went to ACAS, which pronounced a settlement, which P and O was prepared to accept, but which the National Union of Seamen was not.

Mr. Sayeed: Spending on health, education and social security now accounts for over 70 per cent. of Government expenditure, which is the highest ever figure in proportionate or real terms. Does my right hon. Friend agree that to be able to spend such massive sums, without bankrupting the country, is a vindication of the Government's economic policy? Does she regret the fact that the Opposition seem to be more interested in exploiting disadvantaged people for party-political gain——

Mr. Speaker: Order. The Prime Minister can answer only for her responsibilities.

Mr. Sayeed: rose——

Mr. Speaker: Order. The hon. Gentleman has asked his question.

The Prime Minister: I agree with my hon. Friend. The massive amounts now being spent on social security, housing benefit, the Health Service and education are a tribute to enterprise and flourishing industry and commerce, which provide the means for such a high level of services.

Mr. Ernie Ross: To ask the Prime Minister if she will list her official engagements for Tuesday 3 May.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Ross: The Prime Minister said today, as she did last Thursday, that she expects the same level and standard of service, resulting in the same community charge, throughout the United Kingdom. Does the Prime Minister not understand that the massive differences in the levels of unemployment in Britain demand different responses from the local authorities? Does she not understand that, or has no one yet told her?

The Prime Minister: I have made it quite clear that in each country the same level of community charge would apply. As the hon. Gentleman will be aware, the grant to Scotland will be much greater proportionately than the grant to England. The community charge will meet only one seventh of local authority expenditure in Scotland, whereas it will meet one quarter in England. The community charge will be the same in different places in England, and in different places in Scotland, if there are


the same levels of services and efficiency. The differences to which the hon. Gentleman referred will be taken into account in calculating the grant.

Miss Emma Nicholson: To ask the Prime Minister if she will list her official engagements for Tuesday 3 May.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Miss Nicholson: My right hon. Friend may not have seen the ridiculous article by the hon. Member for Dunfermline, East (Mr. Brown) in The Times today, in which he rubbishes the efforts of honest people——

Mr. Speaker: Order. Before the hon. Lady goes too far down that road, I remind her that questions must be directed to the Prime Minister's responsibilities.

Miss Nicholson: It is to do with the attempts of millions of ordinary people in the United Kingdom to give to those in the United Kingdom and overseas. It is an Opposition figleaf to cover their own inadequacies——

Mr. Speaker: Order. The hon. Lady has been here long enough to know that she must ask a question on a matter for which the Prime Minister has responsibility.

Miss Nicholson: Does my right hon. Friend agree that charitable giving is a proper complement to the enormous amount of state aid that is provided for the under-privileged?

The Prime Minister: Yes, I agree with my hon. Friend. Although we have the highest standard of social services that there has ever been in our history, that should be augmented by charitable giving, particularly bearing in mind the enormous number of voluntary associations that we have. My hon. Friend knows a great deal about this, because for many years she was in charge of raising money for the Save the Children Fund. She, that fund, and many other funds have done wonderful things for those in need.

Mr. Henderson: Does the Prime Minister think it fair competition that British confectionery and chocolate

companies cannot buy into Swiss companies, but that the British Fruit Gum and the British Kit Kat are threatened by foreign predators? Will she refer the Nestle bid for Rowntree plc to the Monopolies and Mergers Commission?

The Prime Minister: I understand perfectly well what the hon. Gentleman is referring to. My right hon. Friend will, of course, await the report of the Office of Fair Trading and then make up his mind whether to refer the matter to the MMC.

Mr. Andrew Mitchell: To ask the Prime Minister if she will list her official engagements for Tuesday 3 May.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Mitchell: In welcoming the visit to Britain tomorrow by the Prime Minister of Japan, may I ask my right hon. Friend to make it clear to him that we require action rather than words in terms of free trade between our two countries? In particular, will she make it clear that that applies to further places on the Tokyo stock exchange for British companies, and to the ending of the disgraceful discrimination against Scotch whisky?

The Prime Minister: The visit by the new Prime Minister of Japan is important. We are very pleased, as I am sure my hon. Friend is, with the increasing amount that Japan is investing in this country. There are, as he suggests, one or two matters over which we still have strong disagreement, although our exports to Japan have gone up by some 50 per cent. over the past two years. I shall, of course, discuss those two matters—seats on the Tokyo stock exchange and a fair regime for the taxation of spirits—with the Japanese Prime Minister, and I hope that they will soon be resolved.

Terrorist Incidents (The Netherlands)

3. 30 pm

The Secretary of State for Defence (Mr. George Younger): With permission, Mr. Speaker, I should like to make a statement about two incidents involving the savage murders on 1 May of three Royal Air Force personnel serving in RAF Germany.
Shortly after I am local time on Sunday 1 May, an attack was made with an automatic weapon on three Royal Air Force personnel sitting in a private car near the King George public house at Roermond, in the Netherlands, close to the border with the Federal Republic of Germany. Senior Aircraftsman Ian Shinner, a gunner with 16 Squadron of the Royal Air Force Regiment based at RAF Wildenrath, was killed, and his companions, SAC Lewis and SAC Garth, were injured.
Very shortly afterwards a powerful bomb destroyed a car in the car park of the Baccus discotheque in Nieuw-bergen, killing SAC John Baxter and SAC John Reid, both serving at RAF Laarbruch, and seriously injuring SAC Andrew Kelly, their companion.
The Provisional Irish Republican Army has admitted responsibility for these atrocities.
The whole House will join me in sending condolences to the relatives of the dead and injured, and condemning this further manifestation of the callous barbarism, to which the IRA and its supporters and sympathisers are prepared to stoop. The victims were off duty, non-operational, in civilian clothes and were in the Netherlands for purely recreational purposes. They posed no threat to anyone and their murder is nothing short of a crime against decency and humanity.
Immediate steps have been set in hand by the Netherlands police to identify and trace the culprits. The British authorities are in close touch with the Netherlands and German authorities and members of the Metropolitan police are assisting the Netherlands police at the latter's request.
Our security procedures are kept under constant review and extensive measures are already in hand to guard against terrorist attacks of this kind. All service personnel, wherever they are serving, are reminded continuously of the need for vigilance and of the wisdom of taking appropriate precautions in the light of the threat. We have already taken steps to strengthen still further the security of British forces in Germany and the Netherlands in the immediate aftermath of these attacks and we are considering what further security measures might be appropriate in the longer term, both there and elsewhere. Other British overseas representatives are also maintaining a high state of vigilance at the present time.
The fact remains that, even given the murders and injuries to which our service men have been subjected this last weekend, normal life for our service men, and indeed for all other British representatives overseas, must continue as far as practicable. They, like us, must be able to enjoy the benefits of the way of life that they are dedicated to maintain on behalf of the nation as a whole.

Mr. Denzil Davies: May I express for myself and on behalf of my right hon. and hon. Friends our total condemnation of the murder and maiming of six Royal Air Force service men in the Netherlands in the early hours of last Sunday. May I also express our sympathy to their

families and friends, and our hope and trust that those who, fortunately, survived will fully recover. Murder cannot be justified or condoned wherever it takes place, and there can be no shred of justification for the criminal attacks on those young men, who were doing no harm to anyone.
The right hon. Gentleman has stated that security is being constantly reviewed and that he is looking at security in the longer term. First, will he ensure that consideration will be given to security surrounding the married quarters of our service men and their families in the Federal Republic of Germany? Secondly, we ask that the consideration includes the security of military establishments here in Britain.
Thirdly, it has been suggested that the distinctive number plates on the cars of British service men abroad make them easier to identify. Would it not be possible to replace those distinctive plates with personal identity cards which would be carried by the driver and which could contain all the necessary legal and fiscal information, thereby enabling the plates to be neutral? Fourthly, when security is being considered, could the right hon. Gentleman and those in other Departments consider the effect of proposals for 1992 whereby freedom of movement of people and goods throughout EEC countries will be allowed? Will not those proposals make it more difficult to detect, to control and to deter terrorists?
Ultimately, the best tribute that can be paid to the six young men and their families is to apprehend those who have committed these crimes, to bring them to justice and to punish them in accordance with the due processes of the law.

Mr. Younger: I am sure that not only me but the whole House and those concerned will be very grateful to the right hon. Member for Llanelli (Mr. Davies) for his very sincere expression of sympathy and his support for the armed forces in the difficult work that they undertake.
I assure the right hon. Gentleman that we shall be taking into account the question of security in married quarters in the Federal Republic of Germany as well as elsewhere, and of course in all military establishments, whether they are in Western Germany or the United Kingdom.
I do not wish to be drawn into detailed considerations now, but the possibility of issuing German number plates to British forces personnel serving in Germany has been reviewed on several occasions. The solution is not, however, quite as simple as it seems. Indeed, German number plates would not necessarily make British service men's cars as inconspicuous as people might think. I agree, however, that anything that can sensibly and legally be done, or any advice that can be given to avoid drawing attention to British service men's private cars, needs most careful consideration.
With regard to 1992, it is worth pointing out that, in accepting the provisions of the Single European Act, the United Kingdom and other member States have expressly reserved their right to take such measures as they think necessary to combat terrorism. The provisions of the Single European Act will not, of themselves, require the abolition of immigration controls at the Community's internal frontiers by the end of 1992; nor do they provide any fresh rights of free movement to European


Community nationals. The Government are determined to take any measures that are necessary to ensure security within the United Kingdom.
I agree with the right hon. Gentleman that our greatest priority is to find the culprits and apprehend them. I can assure him that all possible will be done to achieve that.

Sir Antony Buck: Does my right hon. Friend agree that it is gratifying to find that the whole House can unite to condemn what has happened? Will he ensure that there is a NATO initiative to help us to ensure that the IRA does not have any safe haven and that an international campaign is mounted against the terrorists?

Mr. Younger: I am grateful to my hon. and learned Friend. I agree that there is absolute unity among all the parties and other people about the matter. I also entirely agree that, at the end of the day, international co-operation is the only way to make an impact on terrorism.

Mr. James Molyneaux: As a foundation member of the Royal Air Force Regiment, may I echo the sympathy already expressed to the injured and bereaved? Is it not a sobering thought that, if those young men had been armed, and if they had shot any of their assassins, they would by now have been branded as murderers in advance of any court hearing or inquiry? In the circumstances, is it any wonder that the security forces sometimes wonder whether they will ever be able to win the battle against terrorism?

Mr. Younger: I greatly appreciate the right hon. Gentleman's sympathy, especially given his background in the RAF Regiment. As to his other remarks, I do not believe that those considerations will be lost on many people in the country.

Sir John Biggs-Davison: Does my right hon. Friend recall that it is some time since the Provisional IRA, in common with other terrorist organisations on the continent with which it has relations, decided that it would attack NATO installations and personnel—and indeed has done so? May we be assured that there will be the fullest co-operation with other NATO powers and forces so that there can be a common campaign to defeat terrorism on the continent?

Mr. Younger: I am grateful to my hon. Friend. I assure him that we shall do all that we can to involve our NATO allies in co-operation to defeat terrorism. We are enjoying excellent co-operation from our friends in the Netherlands, which we greatly appreciate.

Mr. D. N. Campbell-Savours: Is it not clear that the IRA is now planning a long-term and determined campaign of violence throughout Europe? Since that is its intention, may we have an assurance that the Prime Minister does not feel locked in by undertakings that she has previously given to the House on the question of proposals for the future of Northern Ireland?

Mr. Younger: I do not believe that that question has a direct relevance to this matter—a deliberate and organised terrorist campaign against innocent people. My right hon. Friend the Prime Minister, myself and I believe all Members of the House will join in repudiating that campaign absolutely.

Mr. James Kilfedder: Will the right hon. Gentleman condemn those politicians in Northern Ireland and the Irish Republic as well as in this country who equate the killing of those young, innocent service men, who were off duty, with the killing of the three IRA terrorists in Gibraltar, who were intent on the murder and slaughter of hundreds of people there?

Mr. Younger: I sympathise with the hon. Gentleman. I see no link with anything else. The murder of an innocent person by a terrorist is an event on its own, which should be condemned absolutely on its own.

Mr. Robert Maclennan: Will the Secretary of State accept on behalf of my right hon. and hon. Friends our detestation of those foul crimes and our sympathy for the bereaved? We understand the feeling of the parents of one young Scot, who have said that his murder was an utterly futile act. Will he also accept that, at this time, it is right to repudiate the talk that has come from some sources in Northern Ireland about the containment of violence at an acceptable level? Does he recognise that there is no acceptable level of organised violence and that we are engaged in an international attack upon a vile force? Does the right hon. Gentleman propose to treat the matter in that way when he next meets the Trevi group?

Mr. Younger: I am grateful, and I am sure the relatives will be, for the hon. Gentleman's expression of sympathy, which is greatly appreciated. I am sure that the whole House will agree that there is no acceptable level of violence anywhere—we are all united upon that.

Mr. Alastair Goodlad: Does my right hon. Friend accept that great sympathy is felt in all parts of the House for the bereaved relatives of those who died in this cowardly attack, one of whom was my constituent? Will he reassure the House that all possible resources will be mobilised and sustained by all European Governments—including that of the Republic of Ireland—to ensure that the perpetrators are brought to justice?

Mr. Younger: I particularly appreciate my hon. Friend's sentiments, as one of his constituents was involved. I certainly agree that all Governments throughout Europe, and further afield, will, I have no doubt, join in condemning this violence.

Mr. Tom Clarke: Is the Secretary of State aware that the town of Lenzie, which he knows well, was stunned and greatly saddened by the news of the death of SAC Millar Reid and of the deaths of and injuries to others? Does he accept that, even in her hour of distress, Mrs. Reid spoke for many when she talked of the "pointless and futile" nature of these events? Does the right hon. Gentleman agree that those who perpetrate this sort of activity are gravely mistaken if they think that violence and terrorism do any good to any cause?

Mr. Younger: I very much appreciate what the hon. Gentleman says, particularly because the person affected in this tragic event came from Lenzie which I, too, know. I entirely agree about the futility of this. It is worth recording that there can be no political belief for which it is worth killing a wholly innocent life. That is something that we all believe.

Sir Anthony Grant: In view of the need to bring the perpetrators of this crime to proper trial, will my right hon. Friend make the strongest possible representations to the television authorities that they should not put out any programme whitewashing the IRA in anticipation of any due legal process?

Mr. Younger: I appreciate what my hon. Friend says. I have no doubt that my right hon. Friend the Home Secretary and my right hon. and learned Friend the Foreign Secretary will have noted it, as television matters are very much in their responsibility.

Mr. John Cartwright: As the IRA is clearly dedicated to continue this callous targeting of off-duty service men and their families, is the Secretary of State satisfied about the present level of European co-operation in intelligence gathering of information about the movements of suspected terrorists, and about the necessary monitoring of what they get up to?

Mr. Younger: I could never be satisfied with intelligence gathering until it was virtually perfectly able to tell us what is likely to happen. I can say only that any shortcomings in intelligence are not due to lack of co-operation from our friends in other Governments, all of whom have expressed considerable sympathy for us.

Mr. Churchill: I join my right hon. Friend in expressing sympathy to the families of the murdered young service men. I note that this is a matter which has been considered on earlier occasions, but will my right hon. Friend take up with the Federal German Government as a matter of the greatest urgency the issue of licence plates for British service personnel in West Germany? It is unacceptable that they should be identifiable by the licence plates that their vehicles bear, and it is urgent that the system should be changed.

Mr. Younger: I accept that this matter should be examined urgently, and I confirm that it will be.

Rev. Martin Smyth: I join my right hon. Friend the Member for Lagan Valley (Mr. Molyneaux) in sympathising with the relatives of the bereaved and injured. I also welcome the Minister's assurance that it is not the Government's policy to have an acceptable level of violence—a concept first propounded by a former Secretary of State for Northern Ireland.
Will the right hon. Gentleman acknowledge that those—the hon. Member for North Down (Mr. Kilfedder) referred to them—who have compared the shooting in Gibraltar with this incident either suffer from amnesia when they suggest that this was in retaliation for Gibraltar, given that these events have been going on for a long time, or, far worse, are acting as spokespersons defending the activities of the IRA?

Mr. Younger: I appreciate the hon. Gentleman's remarks, but those people who mention retaliation should bear in mind that this is one of a long series of atrocities in various places and it should be seen in its perspective.
The hon. Gentleman has expressed his sympathy and he might like to know that my hon. Friend the Minister of State for the Armed Forces is today going to see those affected and their families and will consult the security authorities about improvements in security.

Mr. John Browne: Does my right hon. Friend accept that this latest incident, which, as he says, is just one in a long series, highlights the fact that, in the minds of millions of people in this country, the death penalty should be available to the courts as punishment for such incidents? Will he also have strong words with the Home Secretary to see whether we can have a debate on the subject?

Mr. Younger: As my hon. Friend knows, the question of capital punishment for terrorists is very much a matter for my right hon. Friend the Home Secretary, who will have noted what has been said. However, what my hon. Friend said earlier is very important. There can be no division between people in the battle against terrorists. Whatever cause terrorists purport to represent, terrorism is an enemy of all civilised societies and there can be no division in the fight against it.

Mrs. Margaret Ewing: On behalf of my hon. Friends in the Scottish and Welsh National parties, may say that we also extend our deepest sympathy to the families of those involved. To those representing constitutional nationalists, it is clear that, far from advancing the cause of constitutional change, terrorists and those who perpetrate acts of violence set it back.

Mr. Younger: I agree completely with the hon. Lady and greatly appreciate her remarks. It seems particularly obtuse if, when terrorism does not advance the causes that it purports to support, people are killed in such a pointless and futile process.

Mr. Bill Walker: Will my right hon. Friend accept that the Royal Air Force parliamentary group would wish to be associated with his expressions of sympathy and condolence to the dependants of the service men who have died? Will he also bear in mind the fact that all experience in dealing with terrorists shows clearly that they go for soft targets in the hope that that will persuade democracies to change their attitudes and views and that, when democracies adopt such an attitude, they end up with a worse situation? Does he agree that there is only one way to deal with terrorism, and that is the way constantly stated by my right hon. Friend the Prime Minister?

Mr. Younger: I agree with my hon. Friend, and I appreciate those remarks on behalf of the Royal Air Force parliamentary group. As I have said, there is no division in the fight against terrorism.

Mr. Tam Dalyell: Speaking as a contemporary of the Secretary of State—I did my national service in the British Army of the Rhine, rather than, like the Secretary of State, in Korea—it is a formidable task that the forces face in maintaining personnel security in West Germany. The Secretary of State says that there is no link between what happened there and what happened in Gibraltar. Some of us believe that, whether one likes it or not—it may be very unpleasant—there is a link. As Secretary of State for Defence, did the right hon. Gentleman know about the SAS operation before it happened?

Mr. Younger: I agree with the hon. Gentleman's first point. It is indeed a formidable task, but that does not mean that we should not do everything we can to improve security and protect our service men whom, after all, we ask to do a job for us.
On the hon. Gentleman's second point, I, like anyone else, should not anticipate the results of an inquest.

Mr. Tony Marlow: Will my right hon. Friend tell those few friends of terrorism on the Opposition Benches—and there are some—that, in this democracy, the vast majority of people—[Interruption.]

Mr. Speaker: Order. I do not think that that remark should be made in the House. Every Member is an honourable Member of this House and should not be associated with that remark.

Mr. Marlow: I did not say that they were not honourable Members——

Mr. Speaker: Order. I ask the hon. Gentleman to withdraw that allegation about Opposition Members.

Mr. Marlow: I withdraw that remark, but those hon. Members on the Opposition Benches who, by their actions, give support and assistance to terrorism——

Mr. Speaker: Order. That is almost as bad. The hon. Gentleman would not wish that allegation to be made about Members on his side of the House, and I ask him to withdraw it.

Mr. Marlow: The hon. Member for Islington, North (Mr. Corbyn) brought into the House a member of the IRA——

Mr. Speaker: Order. I ask the hon. Gentleman not to take issue with me. Will he please withdraw that comment?

Mr. Marlow: I withdraw that, but I ask my right hon. Friend the Secretary of State for Defence to point out to those hon. Members on the Opposition Benches who perhaps inadvertently by their actions give support to terrorists that in this democracy the vast majority of people, aware that three young airmen have been gunned down without warning and in cold blood, are not over-squeamish about the way in which IRA murderers meet their end.

Mr. Younger: I certainly very much hope that the tragic events that took place on Sunday will convince anyone who is not absolutely convinced of the evil of terrorism.

Mr. David Winnick: Leaving aside the disgusting smear against the Opposition made by the hon. Member for Northampton, North (Mr. Marlow), what evidence is there that the continued killings and slaughter of innocent people by the Provisional IRA will change the minds of the British people about terrorism? If the British people have not changed their minds in 17 years and in four or five general elections—and the same applies to people in the Irish Republic—why should the Provisional IRA leadership believe that if they continue to kill and carry out atrocities there will be any change of mind on the part of the British electorate?

Mr. Younger: I very much appreciate what the hon. Gentleman has said. I agree that there is no sign of anyone's opinion changing. That makes it all the more awful that young lives should be lost in so pointless a manner.

Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that in these grievous times it is sad to hear a leading spokesman for the

Opposition on Northern Ireland affairs say that two wrongs do not make a right? Does not that mean that someone has judged that those who shoot down those who want to blow up other people are guilty and that those who commit these heinous offences are adjudged right? Have we come to the time when Opposition Members say that those who defend justice are wrong and that those who do wrong are right?

Mr. Younger: I do not believe that such a link can be drawn. It could be drawn only if this was an isolated, single instance, the like of which had never been seen before. Unfortunately, we must all admit that this is part of a long series of such attacks, all of which are pointless and result in the loss of completely innocent lives.

Mr. John D. Taylor (Strarigford): In joining my right hon. and hon. Friends from Northern Ireland in extending sympathy to the families in England and Scotland—where many of our kith and kin from Northern Ireland live—may I ask the Secretary of State whether he is aware that changing car plate numbers is no answer to the problem of security for service personnel? Does he understand that there has been a significant increase in IRA terrorism in Northern Ireland and in Europe during the past two and a half years? Will he sit back and reflect on what political message Her Majesty's Government gave to the IRA two and a half years ago?

Mr. Younger: I note with interest what the right hon. Gentleman has said about number plates. I have said that we will look carefully at that question, but, as I said earlier, the solution is not quite as simple as it seems. However, we will certainly look at that possibility. The other issues raised by the right hon. Gentleman are principally matters for my right lion. Friend the Secretary of State for Northern Ireland.

Mr. Richard Holt: Would my right hon. Friend care to contemplate with me that if the SAS had been on hand and had shot those terrorists who killed our Air Force personnel they might have found themselves condemned as they were condemned in a speech made by an Opposition Front-Bench spokesman over the weekend on May day in the north-east of England who described the Gibraltar killings as official state execution? Is not that the language that supports the IRA?

Mr. Younger: I appreciate the point made by my hon. Friend which will not have escaped the notice of many people who read the press in this country.

Mr. Eric S. Heller: As someone who spent four and a quarter years in the Royal Air Force during the second world war, and who served with people from Northern Ireland and southern Ireland, may I state that no one in this House can possibly accept the shooting down of ordinary, young, basic and—I would imagine—working-class people in the armed forces who were there because they felt that it was right to join the forces?
None of us who believe in a peaceful settlement to the problems of Ireland can accept that violence is the answer. Those of us who argued that: we did not agree with state violence cannot accept any other violence. The answer is to get people around the table and to talk in terms of solving the problems of Northern Ireland by political means and not by violence.

Mr. Younger: I appreciate the sentiments that lie behind the hon. Gentleman's comments. He is making the point that, when those young airmen were on duty, they were simply doing their duty; and that when they were enjoying their recreation, they were enjoying it as anyone else might do. The hon. Gentleman's remarks underline the fact that violence is not likely to help the ultimate causes at which those who run the terrorists think they wish to aim.

Mr. Tony Favell: Have the Government received any offers from the Irish Government to help to bring the perpetrators of this appalling crime to justice?

Mr. Younger: I noticed that the Irish Government made a statement deploring the crime very shortly after it was committed.

Mr. Jonathan Sayeed: International co-operation has rightly been identified by my right hon. Friend as being essential for the defeat of the scourge of terrorism. Is he satisfied that agreements such as the Trevi agreement are fully and effectively implemented by their signatories?

Mr. Younger: There is under the Trevi agreement a willingness to make progress, but we have not yet achieved sufficient co-operation to be sure that we are being effective against terrorism.

Seafarers (Strike)

Mr. Tony Benn: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the nationwide strike by British seafarers.
The strike has been directly caused by the action of the P and O company. That company, which pays substantial sums to the Tory party, is seeking higher profits by trying to impose slave labour conditions on its employees, which could, as a result of the exhaustion of its employees, also risk the lives and safety of those who travel on Channel ferries, as occurred at Zeebrugge. The company has dismissed those who refused to accept those conditions, has broken long-standing agreements with the union, and has withdrawn recognition from that union. The employers are now applying to the courts for sequestration of NUS funds. The situation could hardly be more serious for seafarers, upon whom this country, as a maritime nation, has always relied in protecting its lifelines in times of war.
The Government are responsible for the legislation designed to destroy trade unionism upon which millions of working people depend to safeguard their wages, working conditions and safety. The Labour party supports the seamen's action and the House must be allowed to debate the matter urgently. It is not sufficient to leave the matter to the courts or to the mass media, which have never shown any real understanding of these matters.
If the House of Commons disregards calls for help from those who need our protection from injustice, protestations about parliamentary democracy will sound increasingly shallow and unconvincing. I beg you, Mr. Speaker, to allow the seafarers' case to be heard here tomorrow.

Mr. Speaker: The right hon. Gentleman asked leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the nationwide strike by British seafarers.
I listened with care and attention to what was said by the right hon. Gentleman. As he knows, my sole duty in considering an application under Standing Order No. 20 is to decide whether it should be given priority over the business set down for today or tomorrow. I cannot find that the matter that he has raised is appropriate for discussion under Standing Order No. 20, and therefore I cannot submit his application to the House.

Hospital Closures (Northern Ireland)

Rev. Ian Paisley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the closing of the Cushendall hospital and the axing of acute hospital services at Dalmiadia hospital, Ballycastle, and at the Route hospital, Ballymoney.
Those hospitals, along with others, have served a population of 37,000 people. The axing of them and of acute hospital services in my constituency means that some of my constituents will have to travel up to 25 miles to obtain acute hospital services. All the other boards in Northern Ireland will, even after the cuts, have more acute hospital beds available to them than will the constituency of North Antrim, whose board area also stretches into part of Londonderry. If the Government wish to implement a policy that leaves only 500 beds available in an area of 370,000 people, then the Government are saying to the people that they are not interested in the health care of the community.
We have received warnings that in the coming days there will be more IRA attacks and that more innocent people will be gunned down. Those people will need acute hospital services to be available to them. This is the only place where I, as a public representative, can raise this matter. I raise it today and ask that the House gives time to discussing it.

Mr. Speaker: The hon. Gentleman asked leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the closing of the Cushendall hospital and the axing of hospital services at Dalmaidia hospital, Ballycastle, and at the Route hospital, Ballymoney.
I listened with concern to what was said by the hon. Gentleman, and I can well understand the impact that the decisions will have on his constituency in Northern Ireland. However, I must give him the same answer that I gave to the right hon. Member for Chesterfield (Mr. Benn). I regret that this matter is not appropriate for discussion under Standing Order No. 20, and I cannot submit the hon. Gentleman's application to the House.

Hon. Member for Dover

Mr. Frank Dobson: On a point of order, Mr. Speaker. Have you received any communication from the hon. Member for Dover (Mr. Shaw), and in particular have you received a request from him to be given an opportunity to make a personal statement withdrawing the wrongful accusations of support for acts of violence and intimidation which he levelled at several of my right hon. and hon. Friends last Thursday?
A personal retraction would follow the precedent set, for example, last year by my hon. Friend the Member for Warley, East (Mr. Faulds) and by Mr. Willie Hamilton, then the Member for Fife, Central. It would also follow an earlier precedent set by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), after the right hon. Member for Finchley (Mrs. Thatcher), then the Leader of the Opposition, complained that what he had said was a personal reflection on her.

Mr. Speaker: I have received no request from the hon. Member for Dover (Mr. Shaw) to make a personal statement. I have received from him a letter setting out the background to his remarks during business questions last Thursday.

Mr. David Shaw: If it would help, Mr. Speaker, I should be delighted to clarify certain matters, as you invited me to do last Thursday. It may be that the clarification that I gave last Thursday was not sufficient. It is a matter of slight regret to me that the right hon. Member for Chesterfield (Mr. Benn) raised the matter today in the way that he did. It seemed to inflame the matter further. [Interruption.]

Mr. Speaker: Order. I called the hon. Gentleman, and he is giving an explanation. It is not a personal statement, and I hope that what he is saying will not be contentious.

Mr. Shaw: On a point of order, Mr. Speaker. I have tried to construct some words, but, as you see, some Opposition Members do not seem to wish to hear them. I tried to construct words that I thought would help the House, and those outside, to understand what has gone on. I should make it clear that what concerned me about the statement by the national executive committee of the Labour party was the loose wording that called on the Labour movement—and I quote—

Mr. Speaker: Order. I must say to the hon. Gentleman that this is not the moment to refer in detail to what he said last Thursday. If he wishes to withdraw any personal allegation that he may have unintentionally made, I should be very grateful if he would do so. That would be in the right spirit, and would satisfy the House.

Mr. Shaw: I can confirm, Mr. Speaker, that anything that I said was directed at the statement issued by the Labour national executive committee and not at individual Members of the House. I stress, however, that it was a Labour party national executive committee statement.

Mr. Dobson: Further to that point of order, M r. Speaker. It is quite clear, and is on the record in Hansard, that on 28 April the hon. Member for Dover (Mr.


Shaw) said that something that had happened in his constituency—which no Opposition Member thinks should have happened—
occurred within 24 hours of the Labour party national executive expressing solidarity with the acts of violence and intimidation".—[Official Report, 28 April 1988; Vol. 132, C. 509.]
There is no question; the record is clear beyond peradventure. That was not what the Labour party executive either resolved or issued to the press. The Opposition are not satisfied with the hon. Gentleman's failure to withdraw that false accusation; nor will we be satisfied until we hear a retraction from him, or disciplinary action is taken by the Leader of the House and the Tory Chief Whip, who, as you know, Mr. Speaker, spend their time prating in public and pressurising in private about the behaviour of Opposition Members. What we want is equal treatment of Conservative Members.

Mr. Speaker: We have a busy day ahead of us, and I was hoping that we would be able to dispose of this matter this afternoon. I do not think that we can profitably continue discussing it through points of order. I have reflected very carefully, and looked in Hansard to see whether I should at that time have exercised my discretion to get the hon. Member to withdraw what he had said. It was said in a broad sense. He did not make individual charges against individual Members of the House. It was a political argument, and many harsh political things are said in this Chamber. It would, I think, be helpful if we could now reflect on the matter and see whether we can find some other solution.

Mr. Dobson: Further to my original point of order, Mr. Speaker. Many of my right hon. and hon. Friends find it difficult to believe that a specific reference to the Labour party national executive—a group of named, known people which involves 12 right hon. and hon. Members—is just a vague smear, which is what your ruling suggests. This "vague smear", which is untruthful, is apparently acceptable in the House. We would argue, however, that it was not a vague smear, but a direct untruth about the activities and actions of 12 right hon. and hon. Members. I ask you, Mr. Speaker, to reconsider the matter, and examine the precedents that I have cited and what was said before the withdrawals by three of my hon. Friends. I think that you will find that the precedent is and should be binding on the hon. Member for Dover.

Mr. Speaker: Order. I have not seen the statement put out by the national executive. What I heard on Thursday was an allegation that the hon. Member for Dover (Mr. Shaw) had said something rather derogatory about members of the national executive. It was a political matter—and harsh things are frequently said across the Floor of this Chamber in political argument—but it was not out of order.

Mr. Pat Wall: On a point of order, Mr. Speaker. As reported in column 522 of Hansardfor 28 April, the hon. Member for Dover (Mr. Shaw) referred to two Members of the House of Commons. As I was on the picket line on the afternoon when the hon. Gentleman made his statement, I am not prepared to have my reputation impugned in that way. When I was on the

picket line that day, I asked the union's permission to speak, and I spoke in favour of the workers' side of the dispute. They have a right to strike and to receive support. What I will not tolerate is being associated with the idea that I am in favour of vandalising a person's house, or of violence or threats.
Very few hon. Members have had the sort of treatment from the media that my family and I have received. As a result, my son was assaulted by 20 hooligans. His jaw was broken, and he was put in hospital. My wife was reduced to tears in public houses, refused service in shops and spat at. We received hate mail with razor blades sewn into envelopes. No Conservative Member or anyone else can accuse me of being in favour of vandalism or of violence.
I ask for the statement to be withdrawn. It is a disgrace to me; it is a disgrace to my hon. Friend the Member for Liverpool, Walton (Mr. Heller); it is a disgrace to my right hon. Friend the Member for Chesterfield (Mr. Benn); it is a disgrace to all the members of the national executive; and, in my opinion, it is a disgrace to the House.

Mr. Jonathan Aitken: On a point of order, Mr. Speaker. Whether or not my hon. Friend the Member for Dover (Mr. Shaw) commented on a broad political issue, it may be helpful for me, as the Member representing the adjoining constituency, to point out that, whatever acts of intimidation and violence may have occurred, the hon. Member for Kingston upon Hull, East (Mr. Prescott), who was in the area all the weekend, has used his best endeavours to defuse the tensions and has completely disassociated himself—and, I understand, the Labour party as a whole—from the acts of violence. If Labour Front Benchers could simply make it clear that they confirm those attitudes—[Interruption.]—I think that the matter could be buried completely.

Mr. Speaker: I am sure that the whole House accepts that the Labour Front Bench—indeed, any Member of the House, including the hon. Member for Bradford, North (Mr. Wall)—would not advocate violence of any kind. I think that we should reflect further on the matter.

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. May I draw your attention to column 522 of Hansardfor 28 April? It includes the statement that
at least two hon. Members are on the picket line at the moment and, as I understand it, are encouraging the very acts to which I referred earlier".—[Official Report, 28 April 1988; Vol. 132, c. 522.]
Let us refer back to those allegations about two hon. Members. They were of acts of violence and intimidation.
The issue is very simple. The hon. Member for Dover (Mr. Shaw) has made an allegation against two of my hon. Friends. Two weeks ago, you rightly asked my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) to come to the House and make a personal statement, agreed with you through the Clerk of the House. I put it to you that this matter requires precisely the same response from the hon. Member for Dover. Opposition Members look to the hon. Gentleman to agree a statement with you withdrawing the allegations, and for him to make that statement tomorrow.

Mr. Speaker: Order. I shall consider that, but I think that it would be very helpful if the hon. Member for Dover (Mr. Shaw) were to say today that he was not reflecting on the honour of any two Members of the House.

Mr. David Shaw: I am happy to confirm the words which you, Mr. Speaker, have just used.

Mr. Speaker: The hon. Gentleman should go a little further than that and say that he was not alleging that the two hon. Members who were on the picket line were encouraging acts of violence.

Mr. Shaw: I did not intend to allege those matters. As I said earlier, I was referring solely to a statement that had been issued by the Labour party national executive committee.

Mr. Speaker: The hon. Gentleman has, I think, withdrawn those allegations against the two hon. Members concerned. I do not think that we can carry the matter any further this afternoon.

Mr. Dobson: Further to that point of order, Mr. Speaker. Earlier this afternoon, you rightly required the hon. Member for Northampton, North (Mr. Marlow) to withdraw a very generalised accusation of support for terrorism among some unspecified Opposition Members. I would ask you, Mr. Speaker, not necessarily to rule now, but to consider the matter further. You having ruled out of order generalised complaints and accusations against unspecified hon. Members made by the hon. Member for Northampton, North, it must be out of order for an hon. Member to say that 12 hon. Members who are known by name had expressed solidarity with acts of violence and intimidation. I hope that you, Mr. Speaker, will consider the matter further and give a ruling tomorrow.

Mr. Speaker: Order. Perhaps the wisest thing would be for me to give careful consideration to what has been said this afternoon.

Later——

Mr. Eric Forth (Mid-Worcestershire): On a point of order, Mr. Speaker. Since you, Mr. Speaker, and the House wish to clarify all matters outstanding from last week, particularly from 28 April, may I draw your attention to column 520 of Hansard? The hon. Member for Walsall, North (Mr. Winnick) quite clearly said:
The hon. Member for Dover is a liar."—[Official Report, 28 April 1988; Vol. 132, c. 520.]
While you, Mr. Speaker, are of a mind to tie up the loose ends which may remain from last week, and in order to clarify these matters and to straighten out the question of the honour of the House, I now expect that you will call upon the hon. Member for Walsall, North fully to withdraw his words about my hon. Friend.

Mr. Speaker: There was a great deal of noise on Thursday. It may well be in Hansard because it is referred to later. The hon. Member must know that, at this end of the Chamber, the Chair frequently does not hear comments that are made below the Gangway. Perhaps that is just as well. I certainly did not hear that comment, and I said so at the time.

Mr. Eric S. Heller: Further to that point of order, Mr. Speaker. May I appeal to the House to forget this whole business? As an hon. Member who was

accused of saying all sorts of things that I never said, and would not advocate, we have now had sufficient time on this matter and we should leave it at that. When I was asked by the press whether the hon. Member for Dover (Mr. Shaw) was telling the truth, I said quite clearly "No." I believe that that is the case. I should have thought it better for us to have sufficient time tomorrow to discuss the issue of the seamen rather than the nonsense about which we have just heard.

Mr. Speaker: Order. I fully appreciate that this is a very contentious matter, but I consider it inappropriate for political issues of this kind to be discussed through the Chair.

Rating Reform

Mr. John Home Robertson: On a point of order, Mr. Speaker.

Mr. Speaker: Is it a totally different point of order?

Mr. Home Robertson: It is a completely different point of order, Mr. Speaker, but I must say that the words of the hon. Member for Dover (Mr. Shaw) were the most graceless and grudging apology that I have ever heard from anybody.
May I appeal to you, Mr. Speaker, to do what you can to protect the rights of Scottish hon. Members to represent in the House the majority of people in Scotland? May I draw your attention to written question No. 286 in the name of the hon. Member for Eastwood (Mr. Stewart), who is in Strathclyde. We understand that the question is being used as a peg on which the Government can hang an announcement of selective action to cut£27 million from the budget of Lothian regional council.
In the past such action has been preceded by an oral statement in the House. As we have local elections in Scotland this Thursday, the Secretary of State for Scotland is apparently contriving to conceal the impact of this cut in services for elderly people and in schools in Edinburgh and Lothian by claiming credit for reducing rates. If there were to be an oral statement, Lothian hon. Members might be able to refer to the fact that Government cuts in rate support grant since 1979 are costing local ratepayers the equivalent of £1 a week for every citizen in the Lothian region. May I appeal to you, Mr. Speaker, to ensure that the Scottish Office can be subjected to proper scrutiny by elected Scottish hon. Members?

Mr. Speaker: That is not a matter of order; it is a matter of a question on the Order Paper. It may well be that what the hon. Member has said is right, but I have no knowledge of that. I am sure that those on the Front Bench will have heard it.

FOREIGN MARRIAGE (AMENDMENT) BILL [Lords]

Ordered,
That the Foreign Marriage (Amendment) Bill [Lords] be referred to a Second Reading Committee.;[Mr. Kenneth Carlisle.]

Legal Profession (Abolition of Restrictive Practices)

Mr. Austin Mitchell: I beg to move,
That leave be given to bring in a Bill to establish a Ministry of Justice and provide for a more competitive legal service by abolishing the status and title of Queen's Counsel, by allowing barristers to set up chambers anywhere without clerks, to advertise and to take clients without the mediation of solicitors, by allowing solicitors rights of audience in all courts, and by establishing a salaried solicitor service through a Public Defender Service and Law Shops, and for connected purposes.
The Bill would inform and improve legal services by introducing more competition. It is based on the view that the law is failing society, particularly those who are most vulnerable and most need its protection and support. It is doing that because it is pricing itself out through the endless escalation of fees.
The legal aid system is inadequate and at the point of breaking down. It cannot provide equal contest by strengthening the weak against the strong; it cannot provide those who receive legal aid with an adequate service. All too often they get the service which fell off the back of the practice or the chambers. The limits for that legal aid system are too narrow and some vulnerable people cannot use it.
Rather than being a service industry for the people, the law is becoming a self-service industry. It is serving itself and has a vested interest which is protected by restrictive practices. It is in danger of becoming a conspiracy to serve the purposes of wealth instead of people. Indeed, it has become incapable of reforming itself because the power in the two professions is in the hands of those who are doing very well out of the status quo and do not want reform.
My modest little measure proposes to deal with that by taking all legal powers, except for those of a judge and the functions of the House of Lords, away from the Lord Chancellor and setting up a Ministry of Justice such as exists in most civilised countries. That could become the dynamic for reform, to establish family courts, to end delays, to see that judges are properly trainedl—perhaps by sending them on an MSC scheme or to a judges' college so that they get some training—and drawn from a wider range than their present restricted backgrounds. It would be a ministry answerable to the House of Commons—to us.
Secondly, the Bill provides competition, which is in an appropriate dynamic for change because it compels service to the people. The biggest barrier to competition has been the conspiracy to protect fees and to ensure their continuous escalation by restrictive practices.
Therefore, I propose, first, that we should abolish the rank of QC, which is largely a self-appointed clique of those already earning more than £100,000 a year and dedicated to pushing the fees even higher. Let the market decide on grounds of excellence rather than this artificial appointment. If we do that, we can get rid of the two-counsel convention—which is no longer a rule but it is still a convention—which requires people to pay fees of up to £1,000 a day for a QC and £500 a day for a junior, in addition to the fees to the solicitor, as the third in the party.
Let us liberate the spontaneous feelings of the two legal professions for each other, which is otherwise described as

mutual loathing, by allowing solicitors rights of audience in all courts, so that the customer can decide who shall represent him in the court he chooses, and by allowing barristers to set up anywhere without those monopoly managers—the barristers' clerks—manipulating them to push up their own earnings. Let us make it possible for young barristers to break into the profession by setting up anywhere, and doing what might be described as pricing themselves into jobs by setting themselves up in practice to serve wherever and in any way they want. Let us also allow barristers to advertise and to take customers without the intermediary of a solicitor, just as they do overseas, and to sue solicitors for fees.
Finally, the Bill will improve competition and break the stranglehold of private practice by setting up a paid legal service to compete—just as there is competition within the NHS—with private practice. The customer will be able to choose to whom he should turn for service. We can thereby cut out much of the waste which is at present endemic in the legal-aid system. Solicitors are being paid £40 an hour, which is a premium for them to prevaricate and extend cases by dragging out the argument, thereby creating a bottomless pit into which money has to be thrown.
We can get round that problem by a salaried service with an independent legal services commission to ensure that services are properly available to the people.
First, there should be a public defender service, as in the United States—for example, in Orange county, California—which would cut out all the petty corruption and touting for business which goes on in criminal legal-aid cases in the bigger cities.
Secondly, law shops should be set up in town centres, not where the housing market is lushest, to ensure that people get the best service and advice. Law shops would deal with the types of cases that affect people in their everyday lives, such as employment, social security and one individual's rights—those areas where the legal profession is failing them at present. Law shops will be able to employ barristers and solicitors to provide that service.
I would have hoped that a Government who proclaim their attachment to competition would tackle such restrictive practices without having to be pushed into it, as they were, first, by the legislation which took away the monopoly on conveyancing, for which the Conservative party claimed credit in its manifesto, but into which it had to be pushed, and, secondly, by a measure such as this. It seems illogical to refer television practices to the Monopolies and Mergers Commission, but not to refer the far greater range of restrictive practices carried on by the legal profession.
I had also hoped that the law would reform itself, but people who are doing well out of the present situation have a vested interest in not reforming it and that reform has not come. Therefore, it falls to Parliament to act to ensure that people receive the proper and efficient legal service that is their due. The law is there to serve them in all their problems and in all those areas where their rights have to be defended, rather than simply to serve its own interests for its own enrichment, as it does at present.

Question put and agreed to.

Bill ordered to be brought in by Mr. Austin Mitchell, Mrs. Teresa Gorman, Mr. Tim Janman, Mr. Charles Kennedy, Mr. Alun Michael and Mr. Rhodri Morgan.

LEGAL PROFESSION (ABOLITION OF RESTRICTIVE PRACTICES)

Mr. Austin Mitchell accordingly presented a Bill to establish a Ministry of Justice and provide for a more competitive legal service by abolishing the status and title of Queen's Counsel, by allowing barristers to set up chambers anywhere without clerks, to advertise and to take clients without the mediation of solicitors, by allowing solicitors rights of audience in all courts, and by establishing a salaried solicitor service through a Public Defender Service and Law Shops, and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 8 July and to be printed. [Bill 155.]

Orders of the Day — Finance (No. 2) Bill

(Clauses Nos. 22, 23, 26 to 28, 31, 42, 49, 91, 98, 127 and 128 and Schedule No. 7)

Considered in Committee.

[MR. HAROLD WALKER in the Chair.]

Ordered,
That the order in which proceedings in Committee of the whole House on the Finance (No. 2) Bill are to be taken shall be Clause 22, Clause 23, Clause 27, Clause 28, Clause 49, Clause 31, Clause 98, Clause 26, Clause 127, Clause 91, Schedule 7, Clause 128, Clause 42.—[Mr. Lamont.]

Clause 22

CHARGE AND BASIC RATE OF INCOME TAX FOR I988–89

Question proposed, That the clause stand part of the Bill.

The Chief Secretary to the Treasury (Mr. John Major): We start the Committee stage of this year's Finance Bill with what most hon. Members will accept are by far the most important measures in the Bill. Clause 22 reduces the basic rate of income tax in 1988–89 to 25 per cent. and clause 23 sets a single higher rate of 40 per cent. We shall debate both clauses together, but there will be separate votes on them both.
Taken together those clauses produce a radical simplification of our personal income tax structure. The difference over recent years is startling. In 1979 we inherited a system of 11 rates of tax on earned income and of a further two rates of tax on what the Opposition tend to call "unearned" income. This provided special punitive rates on the product of savings and investment even though investment then—as now—is critically important to our economic success.
In 1979 we reduced the number of tax rates to eight. In 1984 we abolished the investment income surcharge. This Finance Bill now carries this progressive simplification further and establishes a system with only two rates of personal tax. As a result, it enables the taxation of capital gains to be aligned with income tax. It now gives us one of the simplest structures of personal income tax anywhere in the world.
These measures are central to our policy of tax reduction and reform. They reflect our belief that people know better than Governments how to spend their own money in their own interest and on their own behalf and should be enabled to do so. We also believe that they are less likely to work productively if they are over-taxed and are not allowed to keep a greater share of the rewards of harder work and greater productivity. We believe. too, that a low tax environment will ensure that people make less use of the tax shelters which are endemic to any high tax regime, and, crucially, that they will be more willing to take risks if they know that successful risk-taking brings a worthwhile return. Those are all key factors in creating the culture for enterprise that is so essential to maintaining a growing economy.
Clause 22 redeems the promise that we made in our manifesto last year—to reduce the basic rate of income tax


to 25p in the pound. It is by no means a new target, but an aim that we first set in 1979. By last year we had reduced the basic rate of income tax from the 33p in the pound that we inherited to 27p—within 2p of the objective set by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in 1979. That was the record and the promise on which we fought the general election. The substantial question before the Committee today is whether the basic rate should now be reduced to a quarter, fulfilling that election pledge which was so warmly endorsed last June.
I recognise that for a variety of reasons the Opposition dislike tax cuts. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley),—who in those halcyon days was the Opposition spokesman on the economy—called last year's tax cuts "a failed publicity stunt." They were not a stunt, and they were not a failure. The tax cuts go on to benefit the economy, and the right hon. Gentleman has moved on.
The truth is that lower taxes benefit millions of ordinary taxpayers. The basic rate is the marginal rate for 94 per cent. of all income taxpayers and for 90 per cent. of unincorporated businesses. This year the marginal rate for basic rate taxpayers will be 8p in the pound lower than the rate that we inherited from Labour, and the lowest that it has been since before the war.

Mr. Chris Mullin: Will the right hon. Gentleman confirm that the total amount of the gross national product consumed by taxation has risen by about 5 per cent., if my memory serves me correctly, from 34 per cent. to 39 per cent. since the Government came to office, and that what he is talking about is the reduction in the rate of income tax?

Mr. Major: I can certainly confirm that we are talking about income tax and that there has been an increase in the gross take from taxation. I am happy to confirm that to the hon. Gentleman. It underlines the fact that we are keen to continue to reduce taxation, but we do not yet believe that we have reduced it sufficiently. I shall return to that particular point in a few moments.
Twenty-three million taxpayers now have a marginal rate of 25p compared to a mere 4½ million taxpayers who benefited from a reduced rate band under the Labour Government.

Mr. Robert Sheldon: The right hon. Gentleman seemed to take pride in reducing the number of tax rates. Other countries think it quite reasonable to have a progressive system. In fact, under the Conservative Government before 1964 there were three reduced bands, then there was the standard rate, and there were the 11 rates of surtax. They did not think that was wrong. They felt that it was right that people should come gently into tax and pay on a progressive basis. Why the sudden change?

Mr. Major: There are other countries of the same political persuasion as the right hon. Gentleman that share our view that there should be a simple tax rate and a low high-tax rate. That is a matter to which I shall be returning. That is fundamental to the case that I wish to put to the Committee in this debate.
Under the last Labour Government the reduced rate band covered only £750 of taxable income. Our 25p band—the same rate as the reduced band that applied before 1979—covers not £750 of taxable income, but £19,300 of taxable income. Nor should we forget that personal allowances are now 25 per cent. higher in real terms than in 1978–79, and the married man's allowance is at its highest level since the war. By contrast, personal allowances fell between 1974 and 1979. The overall burden of income tax is now £20 billion lower than it would have been if we had kept Labour's regime and simply adjusted allowances and thresholds for inflation.
The benefits of these tax reductions have been felt at each and every level of taxable income. The percentage of earnings taken in income tax and national insurance contributions is now lower at all levels than if we had kept the regime that we inherited and simply indexed it. For example, a nurse this year will pay around £12 less in tax than she would have done under the regime that we inherited; and she is now paid much more, too. Furthermore, not only does she pay less tax and is paid more, but there are more nurses than there were before, which reflects our public expenditure priorities.
We have already come a long way in our tax changes, but we do not think—I pick up the point made by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—that we have yet reduced tax sufficiently. The rate of tax for the majority of taxpayers in this country is still too high. That is why, having fulfilled one pledge, we have set a new one: to reduce the basic rate of tax to 20p in the pound—not rashly, not irresponsibly, not even necessarily speedily, but as soon as we prudently and sensibly can. That would give us a starting rate of tax generally in line with that in other countries, although, of course, covering far more people. Opposition Back Benchers have from time to time taken us to task in recent debates for our "failure" to reduce the tax burden. I agree with them. We have not done enough and more must be done. We welcome their conversion, however belated, to the cause of lower taxes. They are only nine years and three general elections behind the majority of voters in this country. The voters in those three general elections were all, of course, behind us.
However, Opposition Back-Bench support is simply not enough. We would welcome the support also of right hon. and hon. Gentlemen on the Front Bench for our policy of reducing taxation. Last year, their spokesman, the right hon. Member for Sparkbrook, made their position perfectly clear well in advance of the Budget. Indeed, the right hon. and learned Member for Monklands, East (Mr. Smith), who will be speaking later, may recall the words of his predecessor to the International Equity Dealers Association last January, when he said:
When the Chancellor cuts the standard rate, as he undoubtedly will, the Labour Party will vote against it in the House of Commons. What is more, we will reverse that decision when we are elected and return to approximately the present level of taxation.
The right hon. and learned Gentleman's prediction about the election result was about as accurate as his later claim that the Conservative Government would not be able to sustain their tax cuts. We have not only sustained them, but extended them.

Mr. David Winnick: rose——

Mr. Major: I will give way in a moment.
Although the right hon. and learned Gentleman may not have been clairvoyant, at least he did tell us what his policy was, even if it was not always completely convincing. I do not wish to sound unreasonable, but it always seemed to me to be rather unlikely that Labour could finance its £35 billion spending programme at
approximately the present level of taxation".
The right hon. and learned Member for Monklands, East, regrettably, was not invited to speak to the International Equity Dealers Association this January—no doubt by an oversight—so we have to turn to other sources for his pre-Budget judgment. Here the seminal document is Woman's Own of 12 March 1988. Bemoaning the fate of a shadow Chancellor, it said:
John Smith has a Budget too. The trouble is no one will hear it.
I offer the right hon. and learned Gentleman an invitation. In a few minutes he will have the Floor. I am sure that I speak for this side of the Committee when I say that we would love to hear what the right hon. and learned Gentleman might have put in his Budget.

The Chairman: Order. Not in Committee.

Mr. Major: Perhaps, Mr. Walker, the hon. Member for Dunfermline, East (Mr. Brown) or the right hon. and learned Gentleman some time later will share with us some of the thoughts on taxation that are relevant to this clause and that the right hon. and learned Gentleman shared with the readers of Woman's Own, when he said that he
doesn't subscribe to reductions in income tax",
although he would support
a change in the thresholds, so that more people on low incomes don't pay tax, and a lower bottom rate of tax, perhaps"—
note "perhaps"; not "certainly", but "perhaps"—
but no other changes and certainly not for the big earners.
That, at least, is clear.

Mr. Winnick: It is noted, at least on this side of the Committee, that the right hon. Gentleman is making very little reference to indirect taxation. All his emphasis is on income tax. As someone who makes no apology for the fact that he believes that there are occasions and times when a decrease in the standard rate of taxation is not justified—I made my views clear last week—I ask the right hon. Gentleman to recognise that accompanying the decrease to 25 per cent. is the starvation of essential services in the National Health Service with ward closures, even hospital closures, and long, long waiting lists. In my own borough, for example, a new extension to the general hospital cannot be opened——

The Chairman: Order. I remind the hon. Gentleman that we are debating income tax.

Mr. Winnick: All I am saying, Mr. Walker, is that if there is a choice between what the right hon. Gentleman is now proposing and, for example, the general hospital extension that cannot be put into use once it is completed because of the lack of cash, at least the Opposition know their priority.

Mr. Major: I understand the point that the hon. Gentleman puts extremely clearly. I remind him that we increased public expenditure on priority programmes by £4·5 billion—rather more than the tax cuts—in the public

expenditure round that was concluded last autumn. As he will know from the additions made then and subsequently to the health budget in particular, very large sums indeed have been directed to priority programmes, for we share his concerns.

Mr. John Smith: As the right hon. Gentleman finds articles in Woman's Own of interest in the debate, does he agree with the observations of Lord Whitelaw that will appear in next week's edition of Woman's Own—I am reliably informed that The Sunday Times and other journals have got it right, and certainly there has been no denial from the noble Lord—that the bad side of the Thatcher Government is that
there are a lot of people very interested in making a lot of money, and not very interested in anything else that goes on. A little compassion is needed.
Does the right hon. Gentleman agree that a bit more compassion is needed from this Government?

Mr. Major: It is rather difficult to comment on an article that has not yet appeared and a report that may or may not be accurate. In view of the right hon. and learned Gentleman's invitation, I shall most assuredly read next week's Woman's Own. I am sure that we shall have plenty of opportunities in Standing Committee to return to this point, and I look forward to that opportunity. I have no idea whatsoever what my noble Friend may have said in an interview in Woman's Own, which has not yet been published and about which I have not spoken to him.

Mr. Smith: I am sure that the right hon. Gentleman would not imagine for one moment that I would misquote. That was a direct quotation from Lord Whitelaw. He said:
a little compassion is needed.
Is that a fair comment on this Government, or is it not?

Mr. Major: I accept what the right hon. and learned Gentleman says, but my noble Friend has specifically made it clear that his criticism generally in that article was directed at yuppies, not at the Government—[Interruption.] I have read The Times report. I have not yet read Woman's Own. Nor, I think, has the right hon. and learned Gentleman, unless he is clairvoyant, because it has not yet been published.
There is one way in which Opposition Members have been consistent, and I am happy to award them a point for that. Clause 23, which abolishes all higher rates above 40 per cent., has been the subject of repeated and often relatively passionate attacks by Opposition Members. [Interruption.] Only relatively; moderation still exists even in some quarters of the Labour party. We are clear that Opposition Members dislike that proposal. We are also fairly clear about why they dislike that measure. They dislike tax cuts because they know that they have been bringing about increasing prosperity. Prosperity and Labour party philosophy do not mix, and the country is well aware of that. We have repeatedly told the House of Commons of the benefits that we believe the reduction in the to rates of tax will bring and that our economic performance has improved.

Mr. D. N. Campbell-Savours: Has the Minister read the document entitled "Taxation and Family Labour Supply in Great Britain" by Mr. C. V. Brown? Does he accept any part of it? Does he recognise that it says that so-called tax incentives do not work in the way that he suggests? Is he writing off the report? What is his view? Is the report relevant?

Mr. Major: I have not read in detail the report to which the hon. Gentleman has referred. But it is crystal clear, to those who wish to see, that since 1979 we have pursued a policy of reducing tax rates. Since 1979, there has been a substantial growth in prosperity and in the economy of this country. There is a causal link between the two events. I am not necessarily required to read each and every article that may or may not have been written on a certain subject.

Mr. Campbell-Savours: Does the Minister understand that his Government—his Department—commissioned the report? It drew on a sample of 8,000 addressees, yielding 7,751 households. The information that it provided was crucial when the Chancellor was considering this year's Budget, but the Minister now tells us that he has not read it and has not considered it. Yet the Chancellor has gone forward and allocated £2 billion to the better-off in society in the form of cuts in higher tax rates.

Mr. Major: I shall tell the hon. Gentleman way I did not read the report. He is suffering under the misapprehension that it may have been commissioned by the present Government. He is wholly wrong. It was actually commissioned by the right hon. Member for Leeds, East (Mr. Healey) some time ago. In no sense was it commissioned by the present Government. It may be for that reason that it has not been brought to my attention.

Mr. Tim Smith: Regardless of what any academic report may state, does not common sense suggest that if tax rates are high, people will work less hard than if tax rates are low? From what we have heard this afternoon, is it not clear that Opposition Members do not have an income tax policy? We have heard from some Opposition Members that the tax burden is too high and should be reduced, and from others we have heard that they want to see a higher rate of income tax.

Mr. Major: I agree entirely with my hon. Friend. It is clear that, as it is common sense, it does not necessarily appeal to Opposition Members.

Mr. John Butterfill: Does my right hon. Friend agree that one of the problems in the business world today is that the unincorporated sector is at a disadvantage compared with the corporate sector? The risk: reward ratio for those who pay direct schedule D taxation is far too daunting. Something needs to be done, and this measure will help with the problem.

Mr. Major: I agree with my hon. Friend. I was proposing to refer to that matter later.
A low tax system encourages risk taking and does not deter it. That refers to the point that my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) had in mind. It also makes the United Kingdom an attractive place for those with internationally tradeable skills and talents to work in and to invest in. In a competitive world, we compete for money and people in a global market. Both are footloose. They go to the least hostile environment. The United Kingdom simply could not survive as an island of high taxation in a sea of low tax economies, without doing irreparable harm to our international competitiveness and our ability to retain talent and attract investment.

Mr. Rhodri Morgan: rose——

Mr. Major: If the hon. Gentleman wishes to intervene, I shall give way. There is no need for him to behave in that fashion.

Mr. Morgan: The right hon. Gentleman has stated that, in his opinion, economic growth advanced rapidly under the Conservative Government when direct taxes fell. Perhaps he would like to consider the fact that, in the nine years since the Thatcher Government—the present Government—came to power, the international oil price has risen by 80 per cent. During the five years of the previous Labour Government, the international oil price rose by 80 per cent. a year! Will he consider whether that has had an even greater impact on any change in prosperity?

Mr. Major: The hon. Gentleman might care to bear in mind that oil revenues are now less than 2 per cent. of revenue and have fallen quite dramatically in the past few years. In the Japanese tax system, there are certainly higher rates of tax, but only at extraordinarily high rates of income. We have chosen a different system for the reasons that we have set out before the House of Commons and that I am now setting out before the Committee.
In a competitive world, skills and investment go to the least hostile environment. Opposition Members who focus on the month-by-month changes in our balance of payments might do better to contemplate the longer term damage to our economy if we drive out that investment and repel that talent. The importance of that talent is the extent to which it brings investment and employment to those regions of the country that still require it. Of course, I recognise that Opposition Members neither accept nor understand such arguments, and they never have.

Mr. Tony Worthington: rose——

Mr. Major: I have given way quite sufficiently in the past few minutes. I shall give way a little later to the hon. Gentleman if he is still enthusiastic.
In 1979, the right hon. Member for Leeds, East confessed that he was mystified by the Chancellor's belief that
somehow or other his cuts in income tax will transform economic performance in the boardroom and on the shop floor."—[Official Report, 13 June 1969; Vol. 968, c. 469.]
He is still mystified, despite the evidence before him of our changed circumstances. Opposition Members believe that people will put in the same effort, take the same risks and make the same investment decisions if an extra £1 earned brings in 17p, 40p or 60p. That flies in the face not just of basic economics but of basic common sense—not just of common sense, but of what has happened in the past few years.

Mr. Doug Henderson: From the study that was quoted earlier by my hon. Friend the Member for Workington (Mr. Campbell-Savours), is the right hon. Gentleman aware that only 19 per cent. of the people who were interviewed said that they could work more paid hours if the opportunity were available? Is he aware also that 81 per cent. said that they were so dependent on existing processes of industry that, even if they were given more incentive, they could not work more? Does that not confirm that the Japanese have the right answer?

Mr. Major: The hon. Gentleman is referring to a report that, for the reasons that I have given, I have not read. It was not commissioned by this Government. The information that has just been passed to me suggests that it dealt only with short-term effects. It does not in any way address the points that we are seeking to make, for we are looking at a tax regime not just for the short term but for the long term. That is the way that we plan in this country.
For example, in 1979 the venture capital industry in this country was almost non-existent. Last year, it invested over £1 billion. In 1980, the first year of the unlisted securities market, £12½ million was invested in new issues. Last year, it was £191 million, and £40 million was invested in the new third market. Since 1983, when it was first started, over 3,000 companies have used the business expansion scheme to raise £750 million. Opposition Members still see no link between willingness to invest and the prospect of greater returns, yet the link is clearly there for all to see. Nor is it confined to people putting their own money into other people's businesses. Since 1979, self-employment has grown by 1 million—more than 50 per cent. That is six times the increase recorded in the previous 30 years. New businesses have been created at the net rate of around 500 a week. Yet again that is evidence that the Opposition prefer to ignore.
We have repeatedly pointed to the evidence that reduced marginal rates benefit not only the economy but the Exchequer. Lower tax rates reduce incentive for higher rate taxpayers to shelter their incomes from punitive taxation, through elaborate tax avoidance devices. Higher rate taxpayers now contribute more revenue than ever before. In 1978–79 higher rate taxpayers contributed only 20 per cent. of total income tax revenue and in 1988–89 they will contribute 30 per cent. To put it another way, under the Labour Government, 80 per cent. of income tax revenue came from basic rate taxpayers; this year they will contribute 70 per cent. That is not because we have soaked the rich, but because we have given them the incentive to create wealth and the tax revenues have benefited.
As Opposition Members appear to have forgotten, I remind them that our view is not some British idiosyncrasy; it is shared by the Governments of the United States, Canada, Australia and New Zealand. The Labour Treasurer of Australia and the Labour Finance Minister of New Zealand share our view on the futility of punitive taxation and of the damage that it does to economic performance.
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Because of our policies, we now have the highest growth rate in the EEC and we shall make sure that that growth rate continues. Not one Opposition spokesman——

Mr. Morgan: rose——

Mr. Major: I gave way to the hon. Gentleman once, which was not wise, and I shall not do so again.
Not one Opposition spokesman has succeeded in refuting these assertions or has even tried. Nor have they denied the evidence, for they cannot. Instead, they pretend that it does not exist. They have fallen back on those old familiar cliches that do nothing to advance the argument or persuade the House of Commons or the country that they are right and we are wrong.

Mr. Worthington: rose——

Mr. Major: The hon. Member for Clydebank and Milngavie (M r. Worthington) must be the only hon. Gentleman to whom I have not given way, so I will do so.

Mr. Worthington: I realise that my hon. Friends are extremely unreasonable in expecting the Minister to have read a document that is relevant to his brief. However, will he confirm that, since receiving his increase in income through the tax cuts, he has smartened himself up considerably and is working harder?

Mr. Major: That is a matter for others to judge. I am far too modes: to say that I worked pretty hard before and shall continue to work pretty hard.

Mr. Gordon Brown: Before leaving these points, will the Minister tell us what share of the total income tax cuts has gone to the top 1 per cent?

Mr. Major: As the hon. Gentleman knows, vast amounts of the cuts in income tax have gone to people on the basic rate or on the threshold. The hon. Gentleman knows that to be the case. If he requires the precise figure, my right hon. Friend the Financial Secretary will provide it in his reply to the debate. In terms of the total, the majority of the resources have gone towards reducing the basic rate from 27p to 25p and to raising the threshold at which people commence paying income tax. That is a benefit to every taxpayer in the country to a greater or lesser extent.

Mr. Brown: If the Chief Secretary cannot give me one of the more important figures arising from the Budget, will he confirm the figure that the Financial Secretary gave to me on Friday? I was told that the top 1 per cent. taking into account income tax reductions, personal allowances and top tax rate reductions, have had 31 per cent. of the income tax cuts and the top 5 per cent. have had 44 per cent? How does the Minister defend that?

Mr. Major: The hon. Gentleman did not hear what I said a few moments ago. I made the point clearly that higher rate taxpayers contributed only 20 per cent. of total income tax a few years ago. This year they will contribute 30 per cent. The hon. Gentleman might bear that in mind.

Mr. Brown: rose——

Mr. Major: No, I will not give way. I have given way twice to the hon. Gentleman who will have every opportunity later to catch Mr. Walker's eye.
Noone will deny the passion that Opposition Members feel on the subject of higher rate tax cuts. They are passionate in their wish to penalise success. They are passionate in their desire to reduce returns from investment. That is what, fires the Labour party. Opposition Members are passionate in their wish to make risk-taking an unrewarding enterprise, notwithstanding the effect that will have on those people who do not have jobs and who perhaps would get them. None of the passion of Opposition Members is any good for Britain, which is what people have observed in the past three general elections.

Ms. Hilary Armstrong: Perhaps the Chief Secretary does not believe that people in this country want to contribute and be part of a country that cares for all people. Some of those tax earners may feel a responsibility to demonstrate their care and concern For the rest of the country. That is not to say that they should


not contribute. Many of them would contribute and be happy to do so. In fact, they are benefiting from the better things in society. Does the right hon. Gentleman want them to contribute?

Mr. Major: I agree with much of what the hon. Lady has said. There is no doubt that the British nation is remarkably openhanded and will contribute to society. We have seen that time and again during the past few years. We have now established a payroll-giving scheme for those who wish to contribute on a structured basis. The hon. Lady is talking not about the openhandedness of those who wish to contribute, but about the compulsion of the Government imposing taxes, so that there is no choice but to contribute. That is a different proposition.
Without the facts Opposition Members have found it difficult to provide any substance for their claim that the Government are creating a poorer society. Therefore, they have accused us of creating a more unequal and unfair society. They are wrong. In the 1970s, the price paid for the sort of artificial equality that they sought was high. In their last period in government it meant a fall in living standards for single people at all multiples of average earnings and a virtual standstill in living standards for a married man with children on average earnings—[Interruption.] The hon. Member for Cardiff, West (Mr. Morgan) may not like it—that may he why the hon. Gentleman could not get elected on earlier occasions—but it is a fact.

Mr. Gordon Brown: rose——

Mr. Major: I have given way to the hon. Gentleman on several occasions and I shall not do so again.
There was also only a tiny increase in real take-home pay for the average nurse over a five-year period.

Mr. Nigel Griffiths: rose——

Mr. Major: I have been exceedingly generous in giving way so far and I now wish to make progress.
That was the price that ordinary working people had to pay under the Labour Government, with their insistence on equality—[Interruption.] I will tell Opposition Members what sort of equality they produced. It was an equality they produced. It was an equality of low opportunity, low and falling living standards and misery and high taxes. It was not equality of opportunity and low taxes.

Mr. Anthony Beaumont-Dark: There is nobody here who believes more than me that people have a right to expect a just return for their labour. However, there is also a need for a just return on risk and capital. Sometimes I have disagreed with things that have happened. But is it not more important that in the end, unless we are willing to give people a just reward upon that capital and upon that risk, there will not be growth? If one is going to take great risks—this country needs great risks to be taken with people's capital—and if there are not just rewards and we return to 90 per cent. taxation, why should anybody take any risk at all? That is the sense of reality that the Government have brought to this country. That is the sense of reality that we have to keep. Success should not make one a pariah.

Mr. Major: My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) crystallises

the point that I have been seeking to make to the Opposition for some time. My hon. Friend does it with great clarity. If Opposition Members do not accept it from me, they might accept it from my hon. Friend. I would be delighted if that were the case.
The Opposition will oppose us on clause 23, because they dislike a Budget that offers people a chance to better themselves, to make money for themselves and to create jobs for others. They prefer a tax system that clobbers those in high-tax brackets, at whatever price to the nation's success, and which does not give people the chance to improve their position. In this matter, yet again, the Labour party reveals itself to be the class party that we expect it to be so frequently. Not only that. but it is a one-class party with a vested interest in class divisions, in impeding social mobility and in destroying personal initiative. That is what the Labour party stands for. It does not seek opportunity for all; it seeks destruction of opportunity for a vast number of people. The Labour party's position on clause 23 is clear. We may not know what higher rate it favours, but at least we know what Lobby Labour Members will enter. However, on clause 22 we do not know even that. We believe that the basic rate of tax that people pay is an issue of such fundamental importance that everybody should know the Labour party's policy; they signally fail to do so at the moment.
The Labour party clearly does not know its own mind on this subject. An unusual silence has fallen over the Opposition Front Bench about the subject of the basic rate since the Budget. Even the coy, pre-Budget hints of the shadow Chancellor to Woman's Ownhave not been repeated. His natural eloquence has been stilled. We have heard nine speeches on the Budget from Labour Front-Bench spokesmen since Budget day, but not one has stated where the Labour party stands with regard to the basic rate. They have sat silent, fearing that anything they say will be taken down and used in evidence against them. Perhaps the shadow Chancellor, who is an extremely eminent advocate, has advised them to use their right of silence.
The Labour party has not only not told the Committee where it stands but, even more remarkably, it has not told the press. Over recent weeks, the hon. Member for Dunfermline, East has treated us to a stream of elegantly phrased press releases. No subject has been too important to ignore or too trivial to overlook. The hon. Gentleman has a press release for them all. We have not had one press release from him about a subject that affects 25 million taxpayers, despite the fact that last Tuesday The Guardiancomplimented him on
his skill in first understanding the point and then maximising the political mileage from it.
Nobody could exceed my admiration for the hon. Gentleman. He must understand the point, so we are forced to draw the conclusion that he has realised that there is no political mileage for the Labour party in saying anything about the basic rate reduction.
Today is the Opposition's final chance to make clear where they stand on the basic rate—[Interruption.]Will the right hon. and learned Member for Monklands, East sit on his hands yet again with his tongue quiet? If he does, it will be a remarkable innovation. The Opposition can vote for the basic rate reduction—[Interruption.] If the right hon. and learned Gentleman would stop chattering I


would be able to concentrate. If he will stop making abusive sedentary interventions I shall stop abusing him from a standing position.
If the Labour party votes for the basic rate reduction it will be an astonishing turn around, given its previous position and the policy on which it fought the election. It is, after all, the high tax party.
Labour Members could abstain and express no view about the basic rate of tax, as they did in 1986 when my right hon. Friend the Chancellor cut the basic rate from 30p to 29p. I should remind Labour Members of the reason that their then spokesman gave for abstaining. He said:
We will not oppose this small step towards returning to the lower level of tax to which the low paid were subject at the time of the last Labour Government."—[Official Report, 6 May 1986; Vol. 97, c. 115.]
Will the interests of the low-paid lead Opposition Members into the Aye Lobby? The low and averagely paid are being offered a basic rate that is the same as Labour's reduced rate.
Labour Members could oppose the reduction, as they did in 1979 when my right hon. and learned Friend the Member for Surrey, East reduced the basic rate from 33p to 30p. That is what they did not once but twice in 1987 when my right hon. Friend the Chancellor reduced the basic rate from 29p to 27p. At that time, the Opposition were convinced
that at the next election the voters must be offered a clear alternative.
The right hon. Member for Sparkbrook made that alternative very clear, when he said:
Cuts in the standard rate of tax across the board are not necessary for our economy and I do not believe that they are the choice or wish of our people."—[Official Report, 18 March 1987; Vol. 112, c. 942–49.]
Is that still the Labour party's policy?
The Committee does not need to be reminded of the choice that the country made when the Labour party offered its alternative. The commitment to reverse the cut in the basic rate of tax was not the winning slogan that the right hon. Member for Sparkbrook or the hon. Member for Dagenham (Mr. Gould) thought it would be.
5.15 pm
The right hon. and learned Member for Monklands, East is often credited with being cannier than his predecessor. I do not know whether that is correct, but he is certainly quieter. Today is the day of reckoning—[Interruption.]The right hon. and learned Gentleman is quiet on policy, but he is not quiet when he is listening from the Opposition Front Bench.
I hope that the right hon. and learned Gentleman or the hon. Member for Dunfermline, East will make it clear whether the Labour party accepts a basic rate of 25p or whether it wants a man on average earnings to pay an extra £3·32 a week in tax—the consequence of a 27p basic rate—an extra £6.64 a week in tax—the consequence of a 29p basic rate of tax—an extra £8.30 a week in tax—the consequence of a 30p basic rate of tax—or indeed an extra £13·28 a week in tax—the consequence of a 33p basic rate of tax. The average taxpayer might be moderately interested to know the Labour party's policy.
While at the Dispatch Box, the right hon. and learned Gentleman or the hon. Gentleman might like to take the opportunity to clarify one or two other questions about the Labour party's tax policy. Would it abolish the upper earnings limit for national insurance, thus creating 2

million basic rate losers, not among the super rich—whom the hon. Member for Wrexham (Dr. Marek) mentioned nine times in his speech the other evening—but among teachers, policemen and junior doctors, who receive no benefit from the higher rate cuts. If it did, would it increase national insurance benefits for those higher earners, thus adding further to public expenditure? Would it simply throw the contributory principle out of the window? Those are hardly second order points, but I dare say that Labour Members have never addressed them. Would the Labour party, not content with having done that, reverse higher rate cuts back to 60 per cent., 70 per cent. or 80 per cent., plus national insurance? Is it still committed, as it was in the election, to abolishing the married couple's allowance, thus putting an extra £7 a week on the tax bills of 12 million married couples? Those are legitimate points that any responsible Opposition would have made clear to the electorate.
In the good old days, the Labour party's tax policies were crystal clear. The right hon. Member for Sparkbrook said:
Tax cuts are quite the wrong prescription for the British economy. Indeed they are neither economically nor socially the right choice for this country.
Does the Labour party still believe that? Are tax cuts still the wrong prescription, or is all that it can offer the "relatively blank sheet" about which the Leader of the Opposition wrote in The Times on 3 October? Perhaps the hon. Member for Dunfermline, East would like to put ink on that blank sheet.
Clauses 22 and 23 set out clearly our tax strategy: simpler taxes, with two tax rates rather than the 13 that we inherited; fair taxes, because even after these changes a man earning £100,000 will pay 16 times as much in tax as the man on average earnings; and, above all, lower taxes with a single higher rate of 40p, a basic rate of 25p and a commitment to a basic rate of 20p as soon as that is prudent and sensible.
That prescription has given us economic success, with seven years of steady growth averaging 3 per cent. a year, and with growth of over 3 per cent. in all but one of the past five years. That growth has been combined with low inflation and increasing living standards. We wish to continue that increase in prosperity. With that in mind, I commend the clauses to the Committee.

The Chairman: Order. I understand that it will be for the convenience of the House to take clauses 22 and 23 together. The Questions on them will be put separately, so it will be in order for the Committee to seek a Division on each.

Mr. Gordon Brown: The one matter on which hon. Members can agree is that the Chief Secretary to the Treasury is genuinely proud of the Government's achievements. He says that the Budget is fair, but forgets to say that 5 million people have lost money as a result of the social security changes that took place simultaneously, and that 2·5 million people have not benefited as a result of the combination of both.
At the same time as the Government are piloting the Bill through the House, child benefit has been frozen, housing benefit has been denied to thousands of people, prescription charges have risen, new eye test and dental check charges have been introduced and nearly 4 million people are having to pay rates for the first time, no matter how poor they are.
The Chief Secretary to the Treasury says that this is a Budget for investment, but forgets to say that, with the exception of Belgium, as a share of national income Britain invests less than any of its major competitors. Even after the last nine Budgets, as a share of our national income, in the oil-rich 1980s, we are investing less than in the 1960s or 1970s. The right hon. Gentleman tells us that this is a Budget for the meritocracy, and then gives the game away by saying that the real beneficiaries of the Budget—the top rate taxpayers—do not include teachers and junior doctors. He forgets to tell us that the financial gains for those at the very top are, in some cases, 50 to 100 times those that have accrued to engineers, research scientists and others who he says the Budget is designed to keep in this country. In the light of all that, is it any wonder that the former Deputy Prime Minister, Lord Whitelaw, has said that a little more compassion is needed from the Government?
If the Chief Secretary will not agree with any of our figures, perhaps he will agree with a Budget analysis to be produced this week, not by the Labour party or the TUC, but by Morgan Grenfell and Co. Ltd. This analysis, described in a press release this afternoon and to be published tomorrow, is entitled:
High income earners: how they will spend their £2·8 billion tax cuts".
I hope that the Financial Secretary will get a copy of the document later this evening. Morgan Grenfell claims that the Chancellor gave misleading indicators of the real benefits to the very rich as a result of the Budget.
The document says that the rich obtained a "disproportionate share" of even the basic rate tax cuts and the personal allowance changes and concludes:
The 1988 Budget discriminated heavily in favour of the better off … The Budget tax cuts were virtually unprecedented in terms of size and concentration in the hands of a very small section of the population.
That appears in a document by supporters of the Conservative party.
Let me tell the House the other conclusions reached in that document. While the Chief Secretary is exhorting ordinary employees to accept about 2 per cent. as basic wage increases because of what they have been given in tax cuts, Morgan Grenfell predicts a 15 per cent. rise in basic income for those on the top tax rates. I have not heard the Chief Secretary criticise those at the very top for taking such large income rises.
The Chief Secretary says that top rate tax cuts encourage savings and investment, and thereby produce jobs, although there is not much evidence that the rate of investment in our productive industries has increased to any great degree in real terms since 1979. In answer to that, Morgan Grenfell says that 83 per cent. of top rate tax cuts will be spent rather than saved, and a smaller proportion of that will of course be invested in productive industry in Britain.
Thirdly, Morgan Grenfell tells us—this is the truth about the new Britain to which Viscount Whitelaw referred in his interview with Woman's Own—the real boom areas in the economy as a result of the Budget will be luxury cars, boats, domestic servants, expensive wines and foreign holidays. This boom will do much for industry abroad and increase our imports. The boom is happening at the same time as pensioners are having to make a choice

between heating and eating as a result of the housing benefit cuts. It is happening at a time when mothers are having to send their children to school ill-clad and hungry as a result of the freeze in child benefit and cuts in other benefits. I believe that the electorate will remember that the biggest tax handout in history to the very rich has been accompanied by the imposition of social security legislation that encourages the transfer of the relief of the poverty trap from social security offices to charitable organisations.

Mr. Gerald Howarth: hope that the hon. Gentleman is not criticising those who wish to spend some of their post-tax earnings on boats. In my constituency about 150 people are employed in manufacturing power boats, not only for people in this country, but for overseas exports, which earn revenue for the Treasury and keep my constituents in jobs. The hon. Gentleman's remark was utterly disgraceful.

Mr. Brown: I hope that the next time we debate the future of the shipbuilding industry the hon. Gentleman will join us in the Lobby to defend jobs, not only in his constituency, but up and down the country, that are being lost as a result of the Government's insane shipbuilding policy.
Let me return to the question that I put to the Chief Secretary. Morgan Grenfell may be too conservative in its account of the distributionary effects of the Budget. As I said earlier, the top 1 per cent.—this was confirmed by the Financial Secretary last Tuesday afternoon—will get 31·3 per cent. of the Budget gain. The top 1 per cent. represent about 200,000 households. They are people who are already earning more than £50,000 a year. They are people who, over the past eight or nine years, have had perhaps up to £10,000 a year in tax cuts as a result of changes in the top rate of taxation. They will gain an extra £10,000 or so as a result of these Budget changes.
How do the Chancellor, the Chief Secretary and the Financial Secretary justify the growing inequality—the growing gap between rich and poor—that will necessarily result from selective generosity to those who are already very rich? Last week we asked the Financial Secretary on what possible evidence he could justify such huge windfall gains by the very rich: on what evidence he based his claim that huge tax cuts to those at the very top will produce incentives and thus create opportunities for other people. The Financial Secretary said that he had such evidence and that our claim that no published evidence could justify his contention was entirely wrong.
When my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) asked the Financial Secretary on what he based his claim that there was academic evidence, the right hon. Gentleman dismissed the views of Professor Brown, a British academic who was good enough to be commissioned by the Treasury to write a report and good enough to be allowed to continue that report even though it was commissioned by a previous Government. The Financial Secretary said, instead, that Professor Lindsey had justified the top rate and other tax cuts. [Interruption.]Does the Financial Secretary doubt that that was what he said?

The Financial Secretary to the Treasury (Mr. Norman Lamont): indicated dissent.

Mr. Brown: The right hon. Gentleman does not doubt it. I confess that I had not heard a great deal about Professor Lindsey, apart from a passing reference in The Sunday Times, and I know that most of my hon. Friends had not had a chance to study his works. Therefore, over the weekend, I took the opportunity to read all the works which the Treasury, at the invitation of the House of Commons Library, had suggested that someone interested in the career of Professor Lindsey should read. I must tell the House that it was not a long and arduous task. There is no book in America, and no hook published in Britain, and there is not even an Adam Smith Institute pamphlet, to which one can look. Professor Lindsey does not even have the honour of having been asked to write a speech for Keith Joseph in the old days when all these ideas were first being advanced. The Treasury told the Library that someone interested in Professor Lindsey should read one article in the Journal of Public Economics written by the professor, or associate professor or, as we would call him, the lecturer.
Let me tell the House what Professor Lindsey does not claim. I suppose that the Financial Secretary will be disappointed, because he does not claim that the tax cuts are compensated for by the extra efforts of the rich. He does not necessarily believe that the rich will respond to the top rate tax cuts by working a great deal harder. Rather, he says that the rich will respond to the top rate tax cuts and other tax cuts simply by declaring a larger share of their income for tax purposes. After all, he says, the reason why the rich will he paying a higher share of taxes is that they are reporting a higher share of income. But Professor Lindsey does not expect the top rate taxes to be entirely compensated for by people declaring more of their income. He expects that the Treasury may get back a sixth to a quarter of what it has lost.
Far from there being evidence from Professor Lindsey that these top rate tax cuts make people work harder, or that the top rate tax cuts will be compensated for entirely by people declaring more income, he argues none of these things. None of the arguments that have been put forward by the Financial Secretary arc sustained by the arguments of Professor Lindsey. None of the arguments put forward this afternoon by the Chief Secretary are sustained by this academic, for I shall read the conclusion of Professor Lindsey's article. He says:
These findings do not support the contention that tax cuts by themselves produce any great surge in economic performance.
Is it not the height of fiscal irresponsibility for the Government to tell us that we should vote tonight for £2 billion in top rate tax cuts to go to the very rich on the basis of an unproven and unprovable theory, an untested and presumably untestable contention, from a relatively unknown academic writing in a relatively unknown journal about tax policy in another country, and to tell us that we should prefer to vote for these tax cuts in preference to the secure and unmistakable, the precise and quantifiable benefits of investing the same amount of money in the National Health Service? With advisers like him in America, I can well understand why President Reagan has said that he listens to astrologers in preference to economists.

Mr. Winnick: Does my hon. Friend agree that the use by Treasury Ministers of some academic either here or abroad is not relevant, and that the Government are determined to reward the rich, as all Tory Governments

have done, perhaps even more than this one? They need no excuse, as they are dedicated to the rich; hence these tax cuts, which have benefited very few people.

Mr. Brown: I am grateful to my hon. Friend for pointing that out, but I know he will understand why I want to take the Government through their own evidence. If they want to justify to the public the reasons why they are introducing the top rate tax cut, we should expect them to produce evidence by which they might be able to stand. The truth is that they have produced one name, in Professor Lindsey, whose work does not stand the test of time and who does not himself expect his work to he used in this way. They cannot justify the tax cut on the basis of the evidence flat they put forward.
If the Germans work harder and pay less tax, and if the Japanese pay even less tax and work even harder, what is so peculiar about Britain if nothing but yet more tax cuts will increase the productivity of the 5 per cent. who are at the very top? Were they not working before 1979? Were they not working hard enough between 1979 and 1988 and therefore need these tax cuts? If that is the case, what possible justification can there be for the House to vote tax cuts to them this evening in the belief that more tax cuts will increase their efficiency? Is not the truth of all this that the Government do not believe that these top rate tax cuts will make people more productive, efficient and responsive to change? Al] they know is that these tax cuts will make people richer, and that is why they are doing it.

Mr. Campbell-Savours: Will my right hon. Friend not accept that this document. and indeed the Lindsey material, if it can be called that, should become centre stage during the Committee proceedings? It is for Ministers to read this document. Indeed, I am sure that we can table an amendment on which to peg a debate on these matters. The Minister cannot just sit quietly by the Dispatch Box, not responding. The evidence needs a reply and Ministers should make public statements. The whole of the Budget statement was based on the proposition that this material i3 rubbish and that they are correct.

Mr. Brown: I take it that my hon. Friend is suggesting that the Chief Secretary spends less time reading Woman's Ownand more time reading some of the academic works that have been produced.

Mr. Major: if I were to do that I would miss some extremely interesting interviews in Woman's Own.

Mr. Brown: I was preparing for a major intervention from the Minister that would cut right across our argument. All he is confirming, however, is that he likes reading Woman's Own.Perhaps in the light of what he said he might do better to spend his time reading Woman's Own than trying to get through some of the major articles which the Financial Secretary, in his rush to the top, is obviously busily reading.
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No one on this side of the House, looking at what is happening up and down the country, believes that tax cuts should take priority over the proper funding of the National Health Service and our public services. Last month we welcomed, as did everybody, the pay awards for nurses and doctors. Like the Select Committee on Social Services, which has a Conservative majority and which published its report only a few weeks ago, we recognise


that the award to the doctors and nurses was the beginning, rather than the end, of attempts to solve the funding problems of the National Health Service.
Let me repeat what the Committee recommended. It did not suggest that the battle for funding would be resolved by the payment of the award only to nurses and doctors. It said that the Government ought to guarantee to fund fully the pay awards under the Whitley committee for the other 500,000 people working in the NHS, which should be an additional amount of money provided by the Government. The Committee said also that there must be 2 per cent. growth in real terms over the coming year to account for technological and demographic changes. It said that the refund of £95 million from the pay awards that were under-funded last year ought to be met by the Government, and it reported that the DHSS had acknowledged that that was an under-funding.
The Committee went on to say that a programme of £1 billion for repair and renovation, as well as current expenditure to make up the shortfall that the Committee itself had identified as £1·8 billion, should be begun immediately under new funding arrangements by the Government. Nothing has changed with the agreement to the pay awards for nurses and doctors. The priority of the British population is that the Health Service should be properly funded in the way that the Select Committee described before we vote tax cuts this evening.

Mr. Ian Taylor: Can the hon. Gentleman explain why the Government have been able to put more money into the National Health Service, including fully funding the nurses' pay award last week, when we have been cutting taxes, while under his last Labour Government they were increasing taxes, yet nurses' pay fell in real terms? Given that many of the nurses whose pay will increase because of the announcement will benefit from the tax cuts proposed under these clauses, does the hon. Gentleman propose to increase those taxes for the self-same nurses if he is in power?

Mr. Brown: The Government have increased taxes, as the hon. Gentleman should be aware, for the average person, who pays a higher share of his income in tax, as well as having increased the total revenue from tax. The hon. Gentleman must be one of the few people in the House who believe that the Health Service is adequately funded. I do not expect that even the Prime Minister, who has had to set up a review on the Health Service, believes that the Health Service is adequately funded.
When we compare our funding to the position in other countries, it is evident that, whereas we spend less than 6 per cent. of GDP on our Health Service, other countries spend far more. The Italians spend 7 per cent., the Germans 8 per cent., the French 8 per cent. and the Americans 10 per cent. of their GDP. That is exactly why the Select Committee on Social Services is determined that the Health Service has proper funding.

Mr. Andrew Rowe (Mid-Kent): I am listening to the hon. Gentleman with interest. As he reads so widely, he should be aware that the Kings Fund and other organisations are aware of considerable anxieties, particularly in Germany, that the German health service has a level of funding leading to demands that nobody in

the health service welcomes simply because they are regarded as unnecessary. This difficulty must be taken into consideration.

Mr. Brown: I am sure the hon. Gentleman is aware that many French hospitals are not fully filled at the moment. There are different demands in different places. In Britain we are not meeting the existing demand. There are more than 700,000 people on waiting lists, many waiting for urgently needed operations. At the same time, as admitted by the DHSS, a programme of at least £1·7 billion is needed to fund the renovation and repair that is required to bring our hospitals up to a satisfactory state. That is exactly why we believe that the first priority of any Government should be to bring the Health Service to its proper state of funding.
A constituent came to see me in my surgery at the weekend. He told me that his mother had just died and that his father had to care for his grandfather, who was more than 90 years of age, severely disabled and unable to move out of his home. The father was waiting to go into hospital for a coronary operation and he could not cope with the grandfather. In Fife, however, there has been an inadequate expansion of care for the elderly. As a result, my constituent has had to use his money to put his grandfather into a private nursing home at a cost of £240 a week—much of which he has had to pay himself. My constituent told me that as a result of the tax cut that he has received from the Budget, and as a result of the under-funding of the Health Service, he has had to pay out more in a week than he will receive in tax cuts in a year.
People up and down the country are asking what is the gain of tax cuts to them when they are on waiting lists, when they have to travel further to visit people in hospital because the cottage hospitals have been closed, and when they cannot get non-urgent operations done because of growing waiting lists. Their greatest fear is that as a result of the tax cuts and the review with which the Prime Minister is involved, they will have to pay a far greater share of their income towards health care.
In case Conservative Members believe that the argument that we advanced before the Budget has disappeared, let me remind them that health authorities and health boards are still having to make difficult decisions—even after taking into account the health salary changes that were announced by the Prime Minister a few weeks ago. Lambeth health authority, for example, is having to make difficult decisions about whether to continue with the closure of a 137-bed hospital, to close out-patients' services for one week in every four and, because of a continuing shortfall in its budget, to consider further the possibility of closing the children's psychiatric hospital. Such are the difficult decisions that health authorities must make. I make no apology for saying that, when the choice is between tax cuts and a properly funded NHS, we shall vote for its proper funding and I believe that the country will be on our side.
The Government faced a number of choices about priorities in the Budget. The Chancellor had to make a choice about how to use £800 million. He had to decide whether that money should go in tax cuts to those with incomes of more than 100,000 a year or be used to avoid restrictions on housing and child benefits. The Chancellor showed us where his true priorities lie. He chose to give a great deal more to those who already have large sums of money. The cost of that decision was that housing and


child benefits were cut. The Chancellor had a choice of properly funding the NHS and our deteriorating social services, or cutting taxes. He was aware of public opinion—not just doctors' and nurses' opinion—about that, but in preference he chose the path of tax cuts.
No Budget in this century—I suspect at any time—has given more money to the rich in our community. No Budget has seen such a large redistribution of income from the poor to the rich as this Finance Bill, and especially clause 23.
The people of this country are far more altruistic and far less selfish than the Government who rule over them. They are looking for a Government who will stand up for the whole nation, not just part of it. They are looking for a Government who will legislate in the interests of the whole community, not just some of it. They are looking for a Government who will give priority in all their policies to the interests of all sections of society, not just the richest few.
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When the people make their choice on Thursday—it will be the first vote on the Budget—I believe that they will have no doubt about rejecting the policies that have been put forward by the Chancellor and the Prime Minister. The Government's response to the growing gap between the rich and the poor in our society has been to widen that gap deliberately and then to deny that any Government can do anything about it. It is for that reason that we shall vote against the clauses this evening. It is for that reason that we shall have the whole country behind us.

Mr. Ian Gow: Nine years ago today the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was the Financial Secretary to the Treasury. Nine years ago tomorrow he was not. I believe that it was ungracious of my right hon. Friend the Chief Secretary not to pay tribute to the right hon. Gentleman who served as a Treasury Minister for almost all of the period of office of the previous Labour Government. When the right hon. Gentleman left office the highest rate of tax on income was 98 per cent. and the basic rate of tax was 33 per cent.
After the last general election a rather disgraceful scene took place when the Labour party said that it was to abandon all its beliefs because it needed to decide wherein would lie the greatest prospect of securing the endorsement and popularity of the British people. It is a profound error for a political party to say that it will simply go to the country with that programme that it believes will he the most popular. During the course of this Parliament the Labour party will find that to build the policies of a great party simply upon those it perceives will be the most popular with the electorate rather than upon principles or convictions is a subterfuge and unworthy of a great party.
I have had an opportunity to refresh my memory of the manifesto upon which the Labour party fought the last election. The concluding paragraph was headed:
Britain will win with Labour".
It reads:
Labour's plans, carefully costed, prudently programmed, can provide that start".
Of course there is the closest link between the proposals in clauses 22 and 23—as the hon Member for Dunfermline, East (Mr. Brown) has made clear—and the programme of public expenditure. What has happened in the past nine years and what has happened as a result of the Budget

—the ninth successive Budget to be presented by a Conservative Chancellor—is that there has been an increase in public expenditure. We are now to have—quite rightly—a programme to reduce taxation.
Labour Members are right to point out—as my right hon. Friend the Chief Secretary acknowledged—that taxation takes a higher proportion of GDP today than it did in 1979. The paradox with which the Labour party is faced and the dilemma that it has been unable to solve is whether it is now in favour of the policies for reducing taxation or is opposed to them. It is legitimate for any Socialist party—it has been the characteristic of Socialist parties throughout the ages—to say that it is in favour of higher taxation. The Opposition have the difficulty—no answer was given by the shadow Chief Secretary to the question put by my right hon. Friend—of deciding——

Mr. Morgan: Will the hon. Gentleman stop waggling his finger at us?

Mr. Gow: It is my finger and I shall waggle it at the Opposition if I want to.
The Opposition will have to decide what to say to the British people at the next election about whether they will diminish or increase the standard rate of income tax. They have not answered that question and will find it difficult to do so. If they have now abandoned all principles and convictions and have decided to go to the country with the programme that they believe will be the most popular, they had better understand that a policy of lower taxation on income is becoming increasingly popular with the British people.

Ms. Armstrong: Is the hon. Gentleman's party in favour of reducing taxation or merely of redistributing it from direct to indirect taxes?

Mr. Gow: My right hon. Friend the Chancellor made it clear in his Budget speech that he had set for our Government target of a basic rate of 20p as soon as it was prudent to reduce income tax to that level. With that commitment, I find myself in wholehearted and enthusiastic agreement. My right hon. Friend made no commitment to reducing the higher rate of tax to below 40 per cent. I hope that we shall be able to move to a basic rate of tax of 20p in the pound. I have clearly said that I am in favour of lower taxation——

Ms. Armstrong: I asked the hon. Gentleman whether he was in favour of reducing taxation overall or merely of redistributing it from direct to indirect tax.

Mr. Gow: The hon. Lady will find that, as the years proceed, the proportion of GDP taken by tax under this Government will diminish.

Mr. John Smith: But it has gone up.

Mr. Gow: I have acknowledged that the share of GDP taken by taxation was higher than it was in 1979 and I praised the Government because we are now reducing that proportion and will go on reducing it throughout the remainder of this Parliament.
The Opposition face a dilemma and will face it in the Division Lobby tonight. They do not know whether to vote in favour of the reduction in the basic rate, whether to abstain, or whether to support it. That has been made clear. The lesson that will be drawn by the British people


when they read their newspapers tomorrow morning will be that the Opposition's vote has shown once again that they are not in favour of reducing the basic rate of tax.
It was entirely prudent of the Chancellor to have reduced the basic rate in the Budget, because, accompanying that reduction in income tax, has gone, for the first time since the Budget introduced by the noble Lord Jenkins of Hillhead, a budgeting for a repayment of debt.

Dr. John Reid: As every opinion poll has shown that the vast majority of the British population would rather have more money spent on social services—particularly the Health Service—than on a cut in the basic rate of income tax, from where does the hon. Gentleman draw the evidence to substantiate his claim that the British people prefer a cut in the basic rate of tax? Was it a straw poll among his friends at the yacht club?

Mr. Gow: I call in aid May 1979, June 1983 and June 1987, when the alternatives were precisely laid before the British people. Indeed, if the hon. Gentleman recalls it, his party committed itself in June last year to reversing the reduction from 27p in the pound to 25p. That was in the manifesto, and that policy of increasing the basic rate of income tax was decisively rejected by the British people on 11 June last year. That was an actual poll, not an opinion poll. The Opposition's position on taxes was perfectly clear to the British people in May 1979, June 1983 and June 1987.
I happen to believe that there is a coincidence between the principles and commitment of the Conservative party and the wish of the British people. If the Opposition want to go into the next election as the party of a higher basic rate of income tax, we shall be happy to accept that challenge from them.
I said that I thought the reductions in income tax were prudent because they were accompanied by a proposal to repay £3 billion worth of debt. It would come as no surprise to me if the repayment of debt in this financial year exceeded £3 billion. My right hon. Friend the Chancellor is a cautious man; he predicted in the past financial year that there would be an increase in borrowing—there was not. Even in the past financial year, there was repayment of debt, and I believe there will be a greater repayment than the £3 billion that my right hon. Friend has forecast in this financial year.
Reductions in income tax in the past nine years have been accompanied by an increase in the gross domestic product—the wealth created by the nation. It is possible for the Opposition to advocate a policy of higher taxation on incomes, but that would be accompanied by a reduction in the rate at which the economy grew. That is why it was right for my right hon. Friend the Chief Secretary to point out that reductions in income tax have been accompanied by higher and unprecedented spending on social security, notably the Health Service. It is a continuing irony that Opposition Members, who constantly claim to be the compassionate and caring party, presided, when in office, over a Health Service in which there were 65,000 fewer nurses than there are under the flint-faced regime of my right hon. Friends on the Treasury Bench. There is an extraordinary paradox in this: the Opposition preach the need to show greater compassion,

but when they are in office they cannot deliver that compassion because they cannot run the economy in a way that creates wealth.

Mr. Nigel Griffiths: Will the hon. Gentleman admit that if the Government double unemployment and triple the number of people who depend on state benefits, more will of course be spent—more than by the last Labour Government or any Government in history? That is the result of a dreadful economic and social policy, not a successful one.

Mr. Gow: That certainly cannot be said of the Health Service on which, as the hon. Gentleman knows, we are spending more than a third more in real terms than did the "caring" Government, when they were in power. The Labour party cannot have been particularly successful in the recruitment and payment of nurses if 65,000 more of them work for the National Health Service now than when the right hon. and learned Member for Monklands, East (Mr. Smith) was in the Cabinet. Why did he tolerate a regime in which there were 65,000 fewer nurses than now?
The proposals in clauses 22 and 23 mark a great philosophical change from the levels of taxation that we had when the Opposition were in power, and, as my right hon. Friend pointed out, from the taxation we have had since the war.
We have been obsessed by egalitarian rates of taxation. We have failed to take account of the move all over the world towards lower rates of tax on income. I do not know whether my right hon. Friend the Paymaster General has been able to confirm that the highest rates of tax on income in the Soviet Union is 41 per cent., 1 per cent. higher than that proposed in clause 23. The Labour party would do well to examine those economies which have been the most successful. Those are the economies which have had the lowest rates of income tax.
I shall vote enthusiastically for clauses 22 and 23 and I shall note with increasing bewilderment how the Labour party is able to resolve its own essential dilemma as to how to present to the British people the case for higher rates of income tax. That is what the Labour party will be doing tonight.

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Mr. Robert Sheldon: My hon. Friend the Member for Durham, North-West (Ms. Armstrong) put the right question to the hon. Member for Eastbourne (Mr. Gow) when she pointed out that direct taxation may well come down, but indirect taxation may well go up. I want to refer later to the proportion of those two forms of taxation.
I wish to deal first with the matter raised by Professor Brown and his attitude survey, which was a very interesting and useful survey. I am always a little unsure about how much weight to attach to attitude surveys. It makes it easier for me to be unsure because I can quote a number of examples that tell us exactly what happened about certain matters in the past. In 1962, when the levels of surtax were lowered, it was held that that would be the great incentive that would release the energies of people at the highest levels of taxation, but nothing happened. There was a collapse, an overseas disaster and the stop-go cycle was resumed a couple of years later.
The same claim was made in 1972 when Lord Barber introduced the unified tax system. He claimed that that


would produce great incentives for the wealth creators of our country, the great industrialists and entrepreneurs, but disaster came a couple of years later.
I accept the normal Conservative argument in this matter. Let us abandon theory for the time being and consider what happens in practice. Little case can be made out for improving incentives, leading to an improvement in the economy. I am sceptical about these matters. We must remain sceptical and hope that the Treasury does not make too much use of these incentive arguments in the future.
The compression of the rates of tax represents a staggering change between this Government and all previous Conservative Governments. The lowest level is 25 per cent., plus 9 per cent. national insurance contribution, making 34 per cent., while miles away, at the other end of the scale, the wealthiest people pay 40 per cent. That was not always so.
The Chief Secretary to the Treasury answered with great courtesy the questions put to him, which the House appreciates, but I was staggered that he did not understand that the long gradation, enjoyed by so many other countries, is to be admired. Other countries say that that is the way a tax system should operate—the more one receives, the higher band one moves up to. That is how such matters should be run, but it was not done, simply for reasons of administrative simplicity. Computerisation will make some things more easily possible which were not so easily possible in the past.
At the same time, child benefit is not being increased in line with inflation. In undertaking such matters, the House is essentially reversing what used to be regarded as fair taxation. About 10 years ago, the Chancellor of the Exchequer introduced his notion of truth in taxation, according to which we had to index taxation automatically, by statute, to ensure that people were paying income tax, not on the basis of inflation, but on the basis of the retail prices index, as a fair test of indexation. That was called the Rooker-Wise amendment. The Chancellor of the Exchequer added his name to it, although the Conservative party was strongly against it. There were fierce battles about that in Committee. That was truth in taxation.
We now have what I call unfair taxation. There is only one candidate for that—the Chancellor of the Exchequer. This clause will be known as the Lawson clause. We must ask ourselves why all previous Governments believed in progressive taxation, yet this Government do not. It was not because they were not Conservative Governments. We are going back a century to the time of Gladstone. All those Governments—Right wing, Left wing, Liberal, Labour and Conservative—believed in progressive taxation until this Government came along and said, "No, that's a load of old nonsense. We really want a flat rate. Even 34 per cent. to 40 per cent. may be too wide a band."
I seemed to catch a hint of that from the hon. Member for Eastbourne, although perhaps I was wrong. He appeared to suggest that 34 per cent. to 40 per cent. was a little too wide and might be compressed at some stage. Clearly that is a fundamental change, and that is why many hon. Members want to speak in the debate.

Mr. Gow: As I have already said that I approve of 40 per cent. for the highest rate, perhaps the right hon. Gentleman will tell the Committee what he thinks should he the top rate of tax.

Mr. Sheldon: I believe that the top rate of tax should be substantially above 40 per cent. The precise levels and graduations would have to be worked out, but I am in favour of a progressive system.
Let us consider the rates of taxation when Alec Douglas-Home was Prime Minister. According to a report of the commissioners of Her Majesty's Inland Revenue, until 1963 the standard rate was 38·75 per cent.—7s 9d in the pound—but there was earned income relief. If one earned one's money rather than received it in dividends, one received relief and that made the rate about 30·13 per cent. However, below that there were three reduced rate hands. The first £60 was taxed at 8·75 per cent. After earned income relief, that gave a figure of 6·8 per cent. which was the first level of tax. The second rate was 16·52 per cent., the third 24·3 per cent. and the full rate was 30·13 per cent.
The levels of surtax went up from 38·75 per cent. to 48·75 per cent., to 51·25 per cent., to 56·25 per cent., to 61·25 per cent., to 66·25 per cent., to 71·25 per cent., to 76·25 per cent. to 81·25 per cent., to 86·25 per cent., to a top rate of 88·75 per cent.

Mr. Campbell-Savours: What was the number of people unemployed?

Mr. Sheldon: There were fewer than half a million people unemployed.
That was a Conservative Government who believed in three reduced rates, standard rates and 11 levels of surtax. Every other Government believed in that. However, there were different approaches. A Conservative Government worked on the basis that the broadest backs should carry the greatest burdens. That respectable view was held by Conservative and Liberal Governments. The Labour party believed in that as an engine for redistribution. We called it redistribution for greatest equality. The Conservatives called it the greatest burdens borne by the strongest backs. However, it had essentially the same theme. The progressive system of taxation existed for 100 years. We called it different things, but it had certain aspects in common. It was valuable because it had so much in common.
Of course the rates would be different. We had different views about how the money should be raised and spent. There must always be a divide between the two sides of the Committee on those matters. However, on the simple question of how people should be responsible for financing the operations of the Government, there was general agreement in the broadest sense.
We also had child tax allowance and child benefit. During the term of the Labour Government about 10 years ago—the hon. Member for Eastbourne has drawn attention to some of the things that happened during that time—we brought in child benefit. Until then there was the child tax allowance. According to the Rooker-Wise theory, to which was added subsequently the name Lawson, that allowance was to be increased with inflation. We said that w give tax allowances to those who paid no tax was nonsense and that it should be a benefit, and if we regarded it as such the problem was that it would count for public expenditure. That was serious because public expenditure, through the arcane way in which we operate these things, is treated differently from income. Negative expenditure and positive expenditure might he nonsense, but we understood the way in which they operated.
Iain Macleod agreed with us on behalf of the Conservative Opposition at the time that child allowance should not count for public expenditure because it was directly related to the income tax allowances that existed before. We agreed that it should be treated in the same way. That firm undertaking was given and I witnessed it in the House. The great tragedy is that that co-operation was withdrawn and child benefit is now fixed and not increased as it should be.
The whole point about child allowances and taxation in general is that the schemes were originally devised for the middle classes. That is why we have a married allowance. We needed that allowance because the middle-class wife did not work. Before the war, when a couple married, the wife lost her job in the bank or Civil Service. That was an automatic consequence of marriage. The burden fell on the husband and he needed an allowance to help him. Therefore, the married allowance was born.
The position is different today because as a rule the wife works. Although two may not live as cheaply as one, they normally manage to get by on a little less than twice their combined income. However, the greatest problem lies with the child allowance. When family benefit was first introduced it was held that it should not be given for the first child. It was believed that the first child would not cost very much on the basis that the middle-class mother did not work. As she was not working, the first child did not cost much. However, for a working mother a child represents a staggering drop in income as it stops her working.
Subsequently we have been coming to grips with those problems. They should have been dealt with through an increase in child benefit as a direct consequence of the change from tax allowances.
As I have said, there were three reduced rates and 11 higher rates. In the 1963 Budget the three reduced rates were reduced to two. In the 1969 Budget they were reduced to one reduced rate and in 1970 the reduced rate disappeared. The surtax levels remained the same and were incorporated in the new system of taxation introduced by Anthony Barber. We understood the reasons for getting rid of the reduced rates. They involved problems with the Inland Revenue and the complications in its having to deal with fairly small sums for large numbers of people as they entered the tax net.
All those issues can be opened up afresh with computerisation. I should have liked the Chancellor to say that he agrees with the whole system of progressive taxation and understands some of the difficulties, but that these matters might be reconsidered when computerisation is completed next year. It is my great hope that my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will be able to introduce those changes which will restore the fair tax system that existed for the past 100 years.
6.15 pm
Under Alec Douglas-Home there was a tax range from 6 per cent. to just under 90 per cent. I keep hearing people refer to the 98 per cent. level that was introduced for a few years. That must be compared with the whole panoply of history in which we charged what we thought to be

reasonable burdens on those backs that could readily bear them. We need that kind of approach to be restored, but perhaps not precisely in those terms.

Mr. Kenneth Hind: I have listened very carefully to the right hon. Gentleman. With regard to having a completely progressive system such as that which existed in 1963, is not the flaw in the argument that today we see an increase in the income tax revenue to the Treasury over and above the revenues brought in by the progressive taxation of the past? Does not the right hon. Gentleman believe that if we reintroduce that progressive level the tax take will decrease proportionally and therefore money will not be available to be directed to those groups whom the right hon. Gentleman rightly stated need that money and should be helped to provide the necessary services in health, welfare and education?

Mr. Sheldon: I should be astonished if that was so. The precise levels of tax and the bands would have to be examined completely afresh, as I am sure that they will be. However, those points can be dealt with readily.
The important point about the reason for the high tax take is that so many people at the top are voting themselves mega-pound salaries. That used not to happen in this country. People, in my view rightly—perhaps wrongly in the view of some Conservative Members—believed that it was right to have great wealth without due cause or need. Of course, the need was for investment. Great wealth simply for display or consumption was not so prominent in this country as it is now. It existed elsewhere, but not here. That has changed now. I think that that is a pity, but others may draw their own conclusions.
In 1973 Anthony Barber introduced the investment income surcharge, the unified tax. He still regarded it as right that those people who received unearned income should pay taxes at a different level from those who worked. That was right. There must always be a difference between those who earn their living, whatever that may be, at whatever level, and those who receive dividends. That is not a punishment. They are more capable of bearing that burden.
In 1859 Gladstone—I am sorry to refer to this, but it is important because certain things remain important throughout history and this is one of them—called income tax an engine of gigantic power. He had great hopes of bringing about the situation that has existed over the past 100 years which, to a great extent, has been brought to a halt by this Government.

Sir Peter Hordern: The right hon. Gentleman refers frequently to Gladstone. Will he remind the Committee of the top rate of tax during Gladstone's time? May I also ask the right hon. Gentleman why he prefers child benefit to family credit? As child benefit is paid tax free, it is the best benefit that any rich taxpayer could possibly have.

Mr. Sheldon: We had these arguments at the time when child benefit was introduced. It was accepted on both sides of the House that the change could be made and would be made to the benefit of mothers. There were great difficulties at the time, but they were overcome.
Gladstone did not introduce income tax. It began long before his time. However, he did introduce reduced rates


of tax, which was important. He began the long process of spreading the burden of taxation according to people's ability to pay.

Mr. Matthew Carrington: Does the right hon. Gentleman remember that Gladstone fought the 1874 general election on the basis that he had reduced income tax rates and would eliminate income tax altogether? The whole basis of Gladstone's economic policy was to transfer completely from direct taxation to indirect taxation.

Mr. Sheldon: The hon. Gentleman knows full well that all that was long before the state took over so many of the functions that it subsequently did, in both the first world war and the second world war. Therefore, it is not possible to make any useful comparisons in that respect. Where one can make comparisons to some advantage is when assessing which people bear the burden of taxation of all kinds. Income tax took its place as the great engine of gigantic power, and we can compare that with the situation in 1988.
We have seen a difference in the proportions of taxation. It is expected that taxation will raise £40 billion in 1987–88. VAT will raise £23 billion, and petrol duty will raise £7·8 billion. There are then the other indirect taxes. The whole balance of taxation is changing under the present Government. The importance of that is that it becomes possible to reduce rates of income tax while retaining a great deal of unfairness—quite apart from the distribution of that taxation—because indirect taxes are not as progressive as direct taxes can be, if properly employed.
Gladstone said also that income tax was inequitable because its demands pressed too hard upon intelligence and skill and not hard enough on property. That criticism remains valid today. Indeed, it is more valid because investment income surcharge has been removed. That surcharge was a result of property ownership, and one paid it on the basis of the dividends received from one's investment. It was in effect a tax on that property. The removal of that charge is a further consequence of the changes made by the present Government.
After more than a century, equitable taxation is facing its most serious setback. We are reversing a century of fair taxation. We need a Government who will consider taxation matters again and try to restore some of the notions of equitable taxation which we have long taken for granted but which are being seriously damaged by this Government.

Mr. Ian Taylor: It was interesting earlier, when the hon. Member for Dunfermline, East (Mr. Brown) was on his feet, that he failed to answer my intervention. I asked him what his taxation policy would be, given that he seemed to oppose our own. I asked him in particular about the nurses, who have benefited from the ability of the Government to fund their award in full. The hon. Gentleman failed to answer that question and went off into the realms of global financial policy.
The trouble is that the Labour party does not have a policy on taxation, other than to make it penal. There is no level of taxation that the Labour party would accept other than one so high that it would destroy initiative and penalise all those who tried to work and put effort into the economy. It was the right hon. Member for Leeds, East (Mr. Healey) who, not that long ago, made the infamous remark that he wished top taxpayers could be squeezed

until the pips squeaked. He did not succeed in convincing the electorate that that was a good thing, and Labour consequently lost the election.
Even at the last general election we found that the Labour party had not worked out who were the top taxpayers. Were they the people earning £100,000 a year, or £50,000 a year? Or were they people earning £15,000 a year who—as was inadvertently admitted in one programme by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—were the top taxpayers whose pips should be squeaked? That is a savage indictment against Labour, in respect of the average working person in this country, with expectations about the kind of wage to which he could aspire—which is by no means the kind of wage which he would consider would put him in the top tax bracket. Is it suggested that these people should now be squeezed until their pips squeak, along with the other supposed multi-millionaires whom the Labour party has traditionally opposed?
The reality is that, under a Labour Government, rates of tax were so high that the biggest industry they ever produced was that of tax dodging. One Opposition Member mentioned that one of the benefits of the Government's proposals to reduce the top rate of tax was that more declarations would be made. To that I said, "Hear, hear." I have no doubt that if we can destroy the tax dodge industry, we shall release a great deal more energy into the. economy, as well as more revenue into the Exchequer.
The question that the Labour party has to answer is: how can this Government cut income tax progressively—to 25 per cert. as it is now proposed—while at the same time increase year in, year on, the amount of money dedicated to the National Health Service? How can the Government cut rates of tax and at the same time ensure that the top taxpayers are contributing—if one takes the top 5 per cent.—a greater amount; up from 24 per cent. in 1978–79 to 28·5 per cent. in 1987–88? The reality is that in the Budget the Government have achieved a number of remarkable things while at the same time reducing rates of taxation.
The Government have been able to afford to take 750,000 people out of taxation altogether, by doubling indexation. They have repaid public debt, so that we now have a public sector surplus. The Government have enabled people who particularly want to provide for individual charities or health charities the ability substantially to do so through the payroll giving relief of £240 per annum—a remarkable and well-targeted measure allowing taxpayers to give to those causes which they consider most needful. At the same time, the Government have increased National Health Service spending.
The last Labour Government apparently believed that higher taxes assisted the Exchequer in social policy, but they ended by cutting the real rates of pay to nurses and by cutting back the hospital building programme by 30 per cent. The argument made by the Opposition should be covered by ignominy when one compares their record and taxation policy against ours.

Mr. Morgan: Does the hon. Gentleman recall that between 1974 and 1979 the Western world was hit by the shock effect of the OPEC price rises of July 1973? All countries in de West suffered a massive transfer of income


from consumer pockets and from the taxable capacity of those consumers to the OPEC countries. Does the hon. Gentleman recall that event?

Mr. Taylor: Of course I recall that event. Opposition Members, when they are under pressure, immediately try to call the oil crisis to 'their aid, but that is no longer a possible excuse. There is a clear decline in the economy's dependence on oil, and at the same time the rate of growth in the economy as a whole is increasing. This year, it is the oil sector that is holding back the economy, because the non-oil sector is growing faster than the oil sector.
Tax revenues do not respond to higher tax rates. I am surprised at what has been said, because a spokesman for the Labour party conceded this fact. He has not had the courage to go as far as we have, but I read clearly the other day that, when asked what he would do about top rates of tax, he said that they would probably have to go down to about 50 per cent. That is interesting. I will willingly give way to any Opposition Member who thinks that my information is wrong, or that the Labour party does not actually believe that rates should be reduced. But Labour Members are disguising the fact that, on the one hand, most of them do not know what they mean, and, on the other hand, they are effectively saying that the concept of reducing top rates of tax is becoming attractive. It is becoming attractive regardless of the academic evidence that they purport to put forward, because there is a consistent trend in the 1980s for tax revenues to the Exchequer to increase when tax incentives are given by reducing marginal rates.
I ask Opposition Members this question—perhaps the right hon. and learned Member for Monklands, East (Mr. Smith) will consider it. If, as we posit and believe, tax revenues to the Exchequer increase as a result of the reduction in the top tax rates, has not what we are doing this year become politically irreversible? In the unlikely event that the Labour party were ever in power again, he would find that he was not able to increase top marginal rates of tax, because by that very act he would be reducing revenues to the Exchequer and thereby would be unable to spend more money on the social services.

Mr. John Smith: As the hon. Gentleman has invited me to contribute, I shall do so. Only a fool would believe the propaganda that if the rate of taxation is reduced the amount of revenue is increased. If the hon. Gentleman looks at the Red Book, he will find that the cost of the reduction in the higher rates is calculated at over £2 billion. If there is anything in his argument, why does he not also argue that the rate should come down from 40 per cent. to 35 per cent.? Presumably, even more money would come in then.

Mr. Taylor: The right hon. and learned Gentleman may well anticipate a further reduction, and I would not be embarrassed by that. I am a realistic and modest man. I should like to see the figures prove my argument this year, and by the time of next year's Budget we can have another look at the position. [Interruption.] Whereas Opposition Members have absolutely no concept of what risk they are prepared to take on tax rates, I have made my position

clear. I will accept the wisdom of the Chancellor in bringing the rate down to 40 per cent. this year, but I see no reason why it should not come down further next year.
If the argument is proved, it will be found that it is politically irreversible. No succeeding Government could increase taxes knowing that they would thereby over a period reduce revenues to the Exchequer. That shows the shift of public opinion in its reaction to tax cuts, and it will be proven over the years to come. It will ensure a continued period of opposition for Labour Members, because they have simply not understood that in the 1980s the fundamentals have changed and the Government can now increase public expenditure without necessarily increasing tax rates. Because they cannot understand that that they also do not understand why the present Government have increased the number of risk-takers who are prepared to invest in the country. Under the Conservative Government, 9 million shareholders have come forward—about the same number as are currently registered as members of the TUC. The other risk-taking schemes have also been very successful. People realise that the risk:reward ratio of such invesments has improved, because the Government will take less of the reward if they are successful.
This is also effective internationally. I should have thought that the right hon. and learned Member for Monklands, East would be extremely pleased with the information provided by the Chief Secretary to the Treasury recently that inward investment in Scotland last year was £2·6 billion—a record. Last year, the figure for the United Kingdom as a whole was over £6 billion. That shows that other countries, and other companies in them, find this country an attractive place. Why? Because they believe at last that the British Government are prepared to provide an internationally attractive incentive, and not only for companies. We are not discussing the corporation tax rates, which have been improved; we are merely discussing income tax. They know that if workers are paid good wages and their tax rates are attractive internationally, that is a good foundation on which to base not only the company but the home market, because of the growth of the economy and the ability of people to purchase.

Dr. Reid: Does the hon. Gentleman accept that the basis of his argument is entirely falacious, and flies in the face of all empirical evidence? The report that was mentioned earlier, carried out with Professor Chuck Brown at Stirling university—the biggest empirical study of the relationship between tax rates and work incentives—has shown that there is no such relationship as the Government posit. I discussed the matter at some length with Professor Brown.
It is no good Ministers telling us that the conclusions of a massive empirical report can be negated because it was commissioned under a Labour Government. First, that suggests that Chuck Brown and his academic staff were playing the tune of the paymaster. That is a terrible slur on an esteemed academic. Secondly, it is disingenuous of Ministers to refer to the report as having been commissioned by a Labour Government, for two reasons. For one thing, although it was commissioned in 1978, it was not started until September 1979, three or four months after a Conservative Government——

The Temporary Chairman (Mr. Patrick Cormack): Order. This is rather a long intervention.

Dr. Reid: I think that it is also an important one, Mr. Cormack, as a Minister brought it up. But I shall be brief.
The report was commissioned under a Labour Government, but it was put into practice and ratified under a Conservative Government. Moreover, the initial study from 1978 was for three years, and twice the Conservative Government——

The Temporary Chairman: Order. The hon. Gentleman really is testing the patience of the Chair. He must resume his seat.

Mr. Taylor: I am grateful to you, Mr. Cormack, although I did not really need protecting. When I hear an intervention as long as that, including several uses of the word "empirical", I begin to wonder whether it should be taken seriously.
This is the importance of being a politician. We are not hiding behind great academic tomes commissioned under a Labour Government, and, from that viewpoint, we are not making the same calculations about the productiveness of the growth in the economy. As a politician, I say that I am prepared to be judged on the results this year. We have reduced the highest rate of taxation to 40 per cent., and all the calculations that I have seen, all my own beliefs and all the experience in America, suggest that we are now likely to find that, for a variety of reasons, revenues to the Exchequer will not decline. Indeed, they are likely to increase. That is a statement of belief, based on my considerations, and I find it a good deal more convincing—certainly as a mast from which I am prepared to fly my flag—than a dry academic tome commissioned some years ago. That seems a reasonably argued proposition.
I believe that when we see the results in public documents in a year's time, we will see quite clearly that the Labour party will be in a desperate fix. If it continues to do what it is doing tonight, voting against these tax reductions, effectively it will be showing that if it reverses that policy it will be decreasing the amount of money available to the Exchequer for social policies.
I conclude on the point on which I began. It seems incredible that Opposition Members claim to be concerned about average wage earners, yet threaten those average wage earners—which include the nurses—with a tax increase. What rate are they proposing? We are reducing taxation from 27 per cent. to 25 per cent. What rate are the Opposition proposing? I should like Opposition Members to address themselves to that question during the course of the debate.

Mr. Campbell-Savours: The Government's case is based on the proposition that the policy that they are pursuing is one of reducing taxation. I submit to the Committee that that policy is an illusion, that the Government are raising money in the same volume that was raised in 1979 and that the public is being duped.
The strategy has been simply to switch from direct to indirect taxation, and, more interestingly, to place a form of taxation on the goods and services provided by the state. I submit that the boom in consumption that has taken place during that same period has little to do with illusory tax cuts and far more to do with the expansion of personal credit.
Are the tax cuts an illusion? The tax cuts have meant a reduction from 33p in the pound to 25p in the pound, but

at the same time, as we all know, there has been an increase in the burden of taxation for a married couple with two children from 35 per cent. to 37·48 per cent.
If we examine where the increases are to be found, we find the infamous doubling oil VAT from 8 per cent. to 15 per cent., which, in effect, was an across-the-board increase on most consumption in this country. There are other forms of indirect taxation of a special nature that are Government-induced. Rates have increased by 164 per cent. since 1979, compared with an 87 per cent. increase in the RPI. In the same period the average unrebated rate per hereditament in this country has gone up from £131 to £467—an increase of 256 per cent. Clearly that is just a switch from one tax to another tax—a tax through local government.
There has been an increase in the cost of mortgages. Mortgages have gone up 167 per cent. during that period against an RPI increase of 87 per cent. Some might say that that was a Government-induced increase in the cost of living, and in effect it was a form of tax. There have been increases in rents of council housing and in the private sector of 165 per cent. Telephone charges have increased by 111 per cent. The price of alcoholic drink has increased by 106 per cent. I am not opposing those increases, but the point is that the Government are raising more revenue in real terms than they were in 1979 and the increases are substantially higher than the RPI.
The cost of fuel and light has increased. The price of coal has gone up by 121 per cent., gas has gone up by 124 per cent. and electricity charges by 94 per cent. Household services generally from local authorities have gone up by 102 per cent. Fares and travel costs have risen by 95·6 per cent. Prescription charges have gone up by 1,200 per cent.—from 20p to £2·60. Annual repayment certificates for prescription charges have risen by 971 per cent.
Water rates have increased. In 1979 the average calculative water rate was £37·50. Last year it was £97·18, an increase of 165 per cent.—twice the level of the RPI. That is a form of hidden taxation. We must add to those the local authority services increases, the increases in the cost of school meals, school milk, capitation allowances, music lessons, school trips For kids, library charges, bus services, school transport, the planning charges of local authorities, home helps, community centres, day care centres, day nurseries and charges for residential home accommodation. Those have all been substantial increases, far in excess of the RPI.

Mr. Michael Jack: The hon. Gentleman was talking about hidden taxation. Does he agree that inflation is the worst of the hidden taxations? Would he care to tell us about the record of the Labour Government on inflation?

Mr. Campbell-Savours: We are now dealing with Government-induced inflationary increases in excess of the RPI. Would the hon. Member for Fylde (Mr. Jack) care to identify any one of those that I have listed which was not Government-induced and which did not lead to an increase in the RPI?

Mr. Anthony Coombs: Is the hon. Gentleman aware that in 1975, under the Labour Government, Government borrowing as a proportion of


GDP was 9 per cent.—an all-time record? Is he trying to persuade us that that was a non-inflationary factor in the economy at that time?

Mr. Campbell-Savours: I shall come to borrowing in a moment, as I have some interesting statistics about borrowing.
Added to those hidden increases is the reduction in student grants, which in effect means an increase in student fees, and the increases in central Government charges to farmers for Department of Industry services where they affect individuals. The massive house price inflation that has taken place since 1979 means that for every £1 spent on housing, people simply get less space. So who is getting a good deal: the house buyer in 1979 or the house buyer in 1988? In 1979 people bought more space for their money.
Hon. Members may think that the Government are reducing taxes, but, by pursuing that policy, they are increasing the costs for people in this country. We now have increased spectacle charges, charges for sight tests, passports, dental charges, museum charges and charges on culture through the theatre. Ironically, there are increased health costs for those who are driven to pursue private medicine. It might be said that their costs would have been lower had they been able to secure that standard of health care within the public sector. Indeed, that must be part of the inflationary equation that we are examining.

Mr. Ian Taylor: Will the hon. Gentleman give way?

Mr. Campbell-Savours: No. I have given way twice already and I have to think of my hon. Friends.
Legal costs have increased, particularly with the reduction in legal aid that we are to discuss in the House tomorrow. This so-called policy of reducing taxation is an illusion. All that has happened is that taxes on income have been switched to taxes on expenditure and on services—particularly those run by local authorities and by central Government.
Let us examine where the money that people seem to have in their pockets has actually come from and what is its origin. If we examine the expansion of credit, we find some very interesting figures. There has been a vast increase in the amount of credit available to the average householder in this country. If we examine credit from finance houses and specialist credit agencies and banks, we find that in 1979 the total of all private borrowings under those important headings, in so far as they affect the amount of coinage that one jingles in one's pockets, was £6·9 billion. In 1987 the figure was £23·6 billion. The amount of credit taken on by individuals in this country has almost quadrupled.
The amount of credit per household has risen from £345 in 1979 to £1,123 in 1987. The average person in Britain in 1979 was in hock to £123. Today that person is in hock to £423. There we have, once again, a threefold increase in the amount of personal credit to individuals in Britain. They fund that credit with the illusory tax deductions that they have received over the past seven years.
With a sleight of hand and clever talk at the Dispatch Box, and because people feel more money in their pockets, the British public have convinced themselves that they are better off. They are no better off at all. This is all an illusion. That is why, under the solid financial

arrangements that characterised the Labour Government's management of the economy, they were far better off.

Mr. Carrington: I am grateful for the opportunity to intervene in the Committee's deliberations on clauses 22 and 23, because together they constitute the fundamental economic policy that the Government have been pursuing since 1979. It is the engine that has created the tremendous growth and strength that have turned Britain round from being the sick man of Europe, with an economy that looked to many to be in terminal decline in the 1970s, to what is now considered to be a miracle economy on a par with the German economy in the 1960s and early 1970s.

Mr. Morgan: The hon. Gentleman says that in the 1950s and 1960s the German economy was considered to be a miracle economy. If that is the case and he now considers Britain to be a miracle economy, how does he explain the Jaguar company having to draw to the attention of its work force the fact that Mercedes workers produce 50 per cent. more cars per man per shift than they do at Jaguar?

Mr. Carrington: The hon. Gentleman will recall that Britain's motor car industry was destroyed by the previous Labour Government's policies in the 1960s and 1970s. I regret that Jaguar, like British Leyland, has still not succeeded in recovering entirely from the Labour Government's policies, despite its excellent export achievement to the United States, even with the strong dollar and, consequently, the high value of sterling against the dollar.
The German economy was based on more than that, as the hon. Gentleman knows. It was based on private enterprise and incentives for people to work. That is what the Government have been doing since 1979. That has been our great achievement and that is what has created a strong, prosperous economy, with the potential for continued growth, out of the disaster of the late 1970s.
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I want to look for a moment at the specific tax changes which clauses 22 and 23 cover. The reduction in the basic rate of tax to 25 per cent. is to be welcomed not only because it reduces the tax burden that the individual has to pay and so encourages incentive and enables people to look more towards their own income to pay for what they are doing, but because it has the effect of enabling companies—a point often missed by Opposition Members—to pay their employees better because they can retain more of the pay that the company gives them. That in itself enables the company to invest more in its activities rather than having to pay, through the prosperous production of goods and services, more in income to its employees, which is then taken by an ever-grasping Government.
Therefore, tax cuts not only encourage people to work much harder, but, more important, enable much more of Britain's wealth to be retained by the companies, which enables them to invest their earnings in more productive activities.

Mr. Butterfill: Does my hon. Friend agree that tax cuts also encourage people to save and thereby encourage the provision of savings to industry through borrowings, making it much easier to expand the economy? For example, does he agree that Japan is much more advanced than we are because its level of savings is so much higher than ours?

Mr. Carrington: I agree with my hon. Friend, but I shall come to that very point when I discuss the 40 per cent. rate of tax, when it becomes even more important.
Most people outside the House, and the majority of hon. Members, will agree that the tax on the lower paid is still far too high. It is too high partly because the income tax band of 25 per cent. is still too high, as my right hon. Friend the Chancellor of the Exchequer said in his Budget statement, but also because the national insurance contribution raises that tax rate to an unacceptable level. We still have a long way to go in reducing that tax band even further so that those who do not receive additional support from the Government through the social security system can retain more of their own money and pay less to the Government, thus enabling them to provide adequately for themselves and their families. We have a lot further to go in reducing that tax band. I should like to see it reduced to 20 per cent. as soon as possible, and I should also like to see an adjustment on the national insurance charge at that level.
The benefit of the 25 per cent. band is incontrovertible. It benefits the less well off——

Mr. John Battle: How does the hon. Gentleman explain the fact that 3·5 million working people do not earn sufficient to pay tax in the first place, even under the proposals in the Bill? In other words, they are on low wages. It may well be that it is the low-wage economy that has enabled employers to retain some money. We must face the fact that 3·5 million people will not benefit from the Budget.

Mr. Carrington: It is an extraordinary fact that Opposition Members are always looking at those whom the Budget does not address rather than those to whom it is directed.

Ms. Armstrong: They are all citizens.

Mr. Carrington: The citizens who do not pay tax are addressed through the social security system and the increased money that we are giving to it. The changes within the social security system also reduce the poverty trap. Whatever the problems of such people, there is no excuse for not addressing the case of those who pay too high a rate of basic tax.

Mr. Butterfill: Does my hon. Friend agree that it is a tribute to the Government that we have progressively increased tax thresholds by more than the rate of inflation, so that we keep increasing the number of people who are no longer within the tax system? The hon. Member for Leeds, West (West Battle) is trying to use that fact to prove the converse. Surely it is the very success of the Government's economic policy in taking people out of tax that creates the position about which he is complaining.

Mr. Carrington: I agree with my hon. Friend. The Budget has taken another 750,000 people out of tax. That is a great benefit, not only to them, but to everyone else, because of the effect of that in reducing the bureacracy that is needed to collect that tax.
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I should like to see, as I am sure my hon. Friend would, far more people taken out of the tax system. One of the great problems in our country is that the tax system still bites far too low down in the system. I believe that the

increase in the thresholds in clause 24—which we are not discussing, Mr. Cormack, so I shall not digress to it—is very much to be welcomed.
I turn now to what is possibly the more contentious side of our debate this afternoon—the reduction of the higher rate of tax to 40 per cent. As has been said, this increases the incentive to work and I believe that that will be shown as the change develops.

Dr. Reid: I am sorry to come back on this point, but if the hon. Member is correct in saying that the decrease in tax increases the incentive to work, why is it that the most extensive study on the issue, costing £500,000, extending over eight years and 22 papers, and based on interviews with thousands of people, has found exactly the opposite?

Mr. Carrington: I was rather expecting that intervention. I refer the hon. Gentleman to the answer that my right hon. Friend the Chief Secretary gave. It appears that that study—the hon. Member for Motherwell, North (Dr. Reid) has the advantage over most Government Members of having seen the study—addresses the short-term effects. Taxation and economic policies should address the long-term effects, not just the short-term ones. The reduction in the higher rate of tax is designed to ensure that long-term growth in the economy is sustained.
I agree with the hon. Gentleman in that I do not believe that the argument for the reduction of the higher rate of tax to 40 per cent. relies nearly as strongly on the incentive to work as does the reduction of the basic rate to 25 per cent. I believe that the argument is much stronger and much more easily shown to exist elsewhere. If people are given all their own money to look after, they will invest it.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) referred to the much higher saving rates in Japan, and indeed they are two or three times those in this country, if I am not mistaken. That is a major difference between the success of the Japanese economy and the success of ours. However, because of the policies that have been followed by the Government since 1979, there has been a major change in savings. Whereas at one time 5 per cent. of the population owned shares, the figure is now 20 per cent.
I recognise, as I am sure some Opposition Members will wish to point out, that owning shares that are listed on the stock exchange does not mean direct investment in industry. The strength and liquidity of the stock exchange are the medium by which industry can get the funds that it needs for productive investment, so the increase in the number of people who own shares is the necessary precursor of a high investment economy and the high saving ratios that we need to achieve.

Mr. Jack: Does my hon. Friend agree that the initial foray into the stock market in buying an existing company has assisted small investors to fund new issues, which are a form of net investment?

Mr. Carrington: I am most grateful to my hon. Friend for that comment, because it brings me on to my next point, which I believe to be the strongest argument in favour of reducing the top rates of tax. It is that our economy needs people who will take risks.
Is the hon. Member for Durham, North-West (Ms. Armstrong) trying to intervene?

Ms. Armstrong: No, I am listening

Mr. Carrington: I am very grateful to the hon. Lady for listening to me and I am glad that waving her finger is one of the ways in which she listens most keenly.
Risk taking in investment is one of the major ways in which new industries start up and in which the future economic growth and success of this country, as of most other countries, will develop. I take the point that has been made by the Opposition about gambling. People will invest in what they believe to be a potentially successful project, one in which they have faith, but in which perhaps few other people have faith.
That is not a risk that a committee will take. It is not a risk that a Government can take with other people's money. It is a risk that the investor can take with his or her own money. That is something that needs to be encouraged, and the only way to encourage people to take risks is to make sure that the potential return on the investment is enough to reward them, enough to make the risk of failure, the chance of bankruptcy, acceptable.
That return was impossible to achieve with a tax rate of 83 per cent., particularly as so much of the earnings of any successful company turned into unearned income, so-called, which was then taxed at 98 per cent. We reduced that to 60 per cent., and that in itself was a great achievement, but 60 per cent. of an investor's return from a high-risk venture still went to the Government. We are now reversing that ratio so that 40 per cent. will go to the Government, who benefit enormously but take no risks, while 60 per cent. will go to the risk taker. That is a major advantage, and a major encouragement to people to invest in the new industries on which we all rely to produce the great wealth that this country needs to see us over the decline of North sea oil revenues in the 1990s and the 21st century.
I believe that the country will greatly welcome these tax cuts. I believe that they will be the engine for increased economic prosperity and that the Committee should vote with enthusiasm in support of these two clauses.

Ms. Armstrong: I agree with one thing that the hon. Member for Esher (Mr. Taylor) said—that as politicians we are concerned not simply with numbers but with the wider aspects of decisions that we make in economic policy. In many senses, that is what we are faced with tonight. We are faced with numbers that people have been arguing about and about which there is very little consensus. Government Members have not been able to offer any direct evidence or any certainty that their supposition that decreasing the top rate of tax will necessarily increase investment and incentives to work harder is correct. They suppose that, but they are not able to give us any evidence for it.
As politicians, we are inevitably concerned with more than that. We are concerned with what a tax will do in those terms, but we are also concerned with the nature of the society that we wish to create. Any financial decision made by the House has a value attached to it and a morality underlying it. In many senses, the Opposition are in contention not just on the figures but on the morality—I might say lack of morality—demonstrated in the tax change with which we are dealing.
As I have said, the evidence that Government Members have been able to produce about precisely what this tax change will mean in terms of increased incentive is at best neutral. The evidence from them is nil. The evidence from reading the texts and the economists is at best neutral.

How will the Government monitor their assertion? What will they do to demonstrate the validity of their assertion that cutting back the top rate will result in increased investment, increased productivity and the creation of more jobs? I shall be interested to hear the precise manner in which the Government propose to monitor it. Will they leave it to rhetoric? I hope not; we deserve a little more than that.

Mr. Ian Taylor: rose——

Ms. Armstrong: No, I shall not give way. I am sorry, but I shall not collude in any more filibustering.

Mr. Taylor: On a point of order, Mr. Crowther. I wished to ask a perfectly clear question. It might have been interesting. It certainly was not part of a filibuster.

The Temporary Chairman (Mr. Stan Crowther): The hon. Member knows that that is not a point of order.

Ms. Armstrong: The essential point about the clause is what it demonstrates about the Government's view of fairness. We have heard something about that from the Government. More than anything else, it demonstrates the Government's complete abandonment of any sense of fairness. Every citizen has an important contribution to make, and each contribution should be measured and valued. That fact is as important to unemployed people and low income earners as it is to high income earners.
Who has made the greatest contribution to the economic recovery that we hear about? As an example, I cite someone in my constituency who, eight years ago, worked for the Consett Iron Company. As hon. Members will know, that company is now closed. Ministers have been lauding the improvements that have been made in Consett as an example of Government success. I welcome any improvements and any jobs that are created. But an example of the cost to people who work at Consett—there are still many who do not—is a man who, eight years ago, worked in the steelworks. He now performs a higher grade job but takes home exactly the same amount as he took home eight years ago. That is an enormous cost for him and his family to pay. They have paid and will continue to pay that contribution to the economic recovery. We have heard from the Government that those who have gained substantially from the economic recovery are to be rewarded, while folk such as that man have been severely penalised in the past few weeks by the attack on housing benefits and by changes in the family income supplement and other benefits.
We are debating the Government's sense of values and morality. I was sickened by much of the preaching by Ministers about what other people should do about morals in this country. My constituents and I live day by day with the real effects of moral values. Last weekend, someone came to my surgery and said, "I am almost ashamed to live in a country whose Government are prepared to reward the rich at the cost of the poor. They are prepared not only to do that but to justify it."

Mr. Jack: I am grateful to you, Mr. Crowther, for invitingme to contribute to the discussion about these two clauses of the Finance Bill.
The hon. Member for Durham, North-West (Ms. Armstrong) spoke with her characteristic passion about matters relating to the north-east of England.
Let me entertain Opposition Members for a moment with a political creed that may be more to their own tune. I refer to events in the Soviet Union that were recently depicted on the BBC's "Money Programme". We have heard much about incentives. If there is a video nasty that Opposition Members should watch, it is a rerun of the first of three reports from the Soviet Union. That video nasty will show them what the word "incentive" means for a group of workpeople who, for years and years, have had their Government on their backs. The message of that programme is clear—"Let us have the freedom to express ourselves; let us earn what we can; let us keep it and invest it; let us go forward and provide products that people are looking for and that our state enterprise is clearly not able to provide."
I am delighted to see Opposition Members nodding their heads in agreement. The thesis of incentive is precisely what our approach to tax cuts is about. I wonder how many Opposition Members have sat, as I have, and negotiated wage claims with workpeople—albeit in places where wage rates were not particularly high. One of the crucial parts of that negotiation concerns who is to pay the rate of income tax. If tax rates are coming down, such negotiations are far more realistic when one is talking about a rate of pay for a certain job and not negotiating who is to to pay a given tax rate.

Dr. Reid: As the hon. Gentleman is maligning the Soviet Union for the dreadful state of its economy, is he surprised to know that the highest rate of tax in the Soviet Union is precisely the rate that the Chancellor has introduced in the Budget—40 per cent.?

Mr. Jack: I am delighted that people in the Soviet Union are paying taxes. Perhaps some people were under the impression that everything is a freebie in the Soviet Union and no tax is paid. I was not, as the hon. Gentleman suggested, slighting the Soviet Union. I rejoice in the outburst of the realisation of the benefit of incentive, as the television programme showed. If the hon. Gentleman cares to watch the rerun, he could learn a useful lesson.
As I was saying before the hon. Gentleman intervened, the benefit of lower taxation is that negotiations on the rate for the job are far more realistic. One does not negotiate who is to pay the tax. More important, it shows workpeople that it is worth putting in the extra effort. That is where the incentive element comes in. In 1979, when I started to negotiate wage rates in the produce industry—they were 35 per cent. under the Labour Government—people were asking, "Why should I bother? Every extra pound that I earn will he taken from me by the tax man." Opposition Members should cut out all the rhetoric and fancy economic history lessons. It is what the man sees on the bottom line of his pay cheque that makes all the difference.

Mr. Battle: As the hon. Gentleman is introducing the notion of what the man sees on the bottom line, what advice would he give my constituents who have jobs and who earn less than half the average wage—according to the Government's figures, that is £224 a week—and gain precisely nothing from the Budget? They are angry because tax cuts have gone primarily to those who earn well over £50,000 a year and not to those earning below £7,000 a year.

Mr. Jack: I listened to what the hon. Gentleman said, but he should bear in mind that since this Government came to office some of the lower-paid workers to whom he referred have been lifted out of paying tax altogether. In addition to those who, by the indexation of allowances would otherwise have come out of paying tax, 1·7 million people today no longer pay income tax. That is what the Government have done. I agree with my hon. Friends who have said that still fewer people should be paying tax. I subscribe to the view that the income tax rate should go further down from 25p.

Mr. Battle: rose——

Mr. Jack: I should like to make this point before the hon. Gentleman intervenes again. In order to address the point about a man on average or below earnings, I should say that in the tax year 1978–79 average earnings in this country were £92·80. The tax rate was 35 per cent. In the current financial year, average earnings in this country are £244·70, and the tax rate is 25 per cent. That is a0 tribute to the strength of the economy under the Chancellor's direction. It enables us to have a debate as to whether we should approve in this Bill a tax rate of 25 per cent. As has been said, perhaps that is part of the reason why Conservative Members are able to make the proposition and you are attacking us for doing so.

The Temporary Chairman: Order. I am not attacking the hon. Gentleman. He must address his remarks to the Chair and the use of the word "you" gives rise to certain misunderstandings.

Mr. Jack: I apologise, Mr. Crowther, if I give the impression that I am using you as a tool with which to attack Opposition Members. My remarks were directed across the Chamber, not at your good self.
I have made the point about average earnings and the relationship with tax. One of the strongest weapons in my campaign during the election was the ability to tell people what a Labour Government would cost in terms of income tax. Some of the estimates referred to a tax rate of up to 50 per cent. As one of my hon. Friends has said, it was difficult to work out precisely what the rate of income tax would have been under a Labour Government. I am certain that that is what encouraged people to vote for the Conservative party. However, next time, when I tell them that I sat opposite the pro-tax party—the people who wanted to vote against reductions in income tax—they will come flocking back to vote for me. There may he a few side issues that may deflect people on Thursday, but the dawn of realisation will come as Opposition Members expound the cost of their policies.
One Opposition Member asked what people think of a 25p rate of income tax. Unlike Opposition Members, I went out and asked my constituents. Conservatives do not just listen; they go and ask questions. I went out with some of my younger supporters and did a survey. One Saturday morning I spoke to a random sample of 100 people in the shopping square in St. Annes. Hon. Members may be surprised to know that 70 per cent. of the people to whom we spoke were in favour of the income tax cuts that the Government have proposed. However, I advise my right hon. and hon. Friends on the Front Bench that they will have to do a little more persuading to get the message across that we are spending nearly £2 billion extra on the National Health Service, because that message has not


filtered through. Despite what Opposition Members have said, people will be persuaded that they can have tax cuts with fairness. It is important to know that people are in favour.
I carried out another survey last year, also before the election. I met an 18-year-old man who was the reserve goalkeeper for Tranmere Rovers football club. He was not on high earnings, and I asked him what he thought of the previous Budget when tax cuts were made. He said, "Marvellous. With taxes down, I can go to work. It will not cost me any more and I will have a bit more in my pocket." Think about how much happier he will feel this year. It is the kind of save that any 'keeper' would want to make.
I want to point out to Opposition Members one or two salient facts about higher-rate taxpayers. In the tax year 1978–79 there were 760,000 higher rate taxpayers. Today there are 1,170,000. When we came to office, those taxpayers contributed £800 million at today's prices. Today, higher-rate taxpayers contribute £3·1 billion. Their share of the tax burden in this country has risen to 28·5 per cent. They are paying their way.
The change in top rates is a good measure, because it will increase tax revenues, as will the reduction in standard rate tax. In 1978–79, when the tax rate was 33p in the pound, the revenue from income tax was £18·5 billion. This year is is estimated to be £31·1 billion. There seems to be an inextricable causal link between increasing the tax revenue and reducing the tax rate. That has enabled the Government to spend record sums of money on health, social services and social security. I have to advise Opposition Members that that is why I shall go into the Lobby tonight and vote in favour of these clauses.
I make a plea for a group whose income tax rates deserve special consideration—elderly people. I realise that an elderly person who enters a rest home, and who has no savings, will pay no income tax and will effectively receive £7,500 of income without tax. However, a person on the new income tax rate of 25 per cent. has to have a gross taxable income of about £8,500 to be in the same position as the elderly person. I believe that we have work to do on the taxation position of the elderly. I see that my hon. Friend the Minister has taken note of that. Perhaps he might comment on it in his reply.
These are good clauses. They are worthy of our support. The case that Conservative Members have made is incontrovertible.

Dr. Lewis Moonie: contribution will be brief. I am not a member of the Committee that will be considering the Bill upstairs. Therefore, I shall confine my remarks to the National Health Service and the relationship between public spending and the level of financing of that service. I have heard so much flatulence from the Government Benches tonight that, if anyone wishes to avail themselves of may professional services I shall be pleased to oblige. I shall not charge anything, because, of course, I am against that.
There are many causes to which national income can be applied more worthily than the tax cuts about which we are speaking.

Mr. Barry Field: Will the hon. Gentleman give way?

Dr. Moonie: No, I will not give way. I have only just started.
Among those causes is the relief of poverty. I sometimes wonder whether Conservative Members understand what poverty means, when they blithely talk about average earnings of £240 a week. I assure the hon. Member for Fylde (Mr. Jack) that in my constituency there are not too many people who earn that amount, particularly in a manual or skilled job in a factory. Certainly the vast majority of people in the Health Service do not earn that amount. I have not met many people, when I have been canvassing during the past few weeks, who earn that amount. I would be very glad to meet this mythical average person, as I am afraid there are very few in Kirkcaldy.
There are more worthy causes to which we can devote our income—for example, housing and the NHS in which I have worked for many years.
I should like to confine my remarks to the need for additional spending on health and social services. I am not naive enough to believe that spending on the NHS alone will improve the nation's health. However, when measured on the rather crude indices by which we measure health in this country, it will, on the whole, increase spending on the relief of poverty and on the other areas that I have mentioned.
However, there are several areas in the NHS, which. during the past few years, have had prolonged underfunding. I compare that underfunding with the perceived needs of the people in this country. There are several areas in which increased spending on the NHS would have great effect. My hon. Friend the Member for Dunfermline, East (Mr. Brown) has touched briefly upon them.
We should remember that the funding of the pay awards for nurses, doctors and paramedical staff a few weeks ago will do nothing for the present problems of the NHS. They will only stop them becoming worse. I am glad that those pay increases have been funded. However, I would feel happier if there were the same pay increases in the pipeline for other groups of workers in the National Health Service. Otherwise, the position will get worse than it was even last year.
During the past seven years, there has been cumulative underfunding of the NHS of nearly £2 billion at today's prices. The Select Committee, of which I am glad to be a member, said that £1 billion should be spent in the short-term on remedying some of the deficiencies in the NHS.
There are seven sectors on which money should he spent. The first and most important is community care for people who are unable to look after themselves, such as those who have a mental handicap or illness, elderly people who are infirm or suffering from dementia, and physically disabled people.
For many years I worked to try to develop a service in Fife for those groups. Shortly before I left that employment, I identified a £10 million spending programme that would have alleviated between 10 and 20 per cent. of the immediate need for those services in that area. I used a crude measure—most indices used in health are crude—but when scaled up it came to £150 million for Scotland and 10 times that amount for the United Kingdom. I defy any Conservative Member to say that it would be less.
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Accommodation, caring staff, special services and research will be needed merely to indentify the needs of those groups, particularly elderly people, who, unlike the other groups, live at home, often in desperate deprivation. I think that £1·5 billion is probably an underestimate of the amount needed, but it shows that the Select Committee's request for £1 billion in total was not unreasonable.
The second and third sectors, which are linked, relate to after-care in the community. Full advantage must be gained from the efficient system for acute care introduced by the Griffiths proposals. I accept that those proposals have increased the efficiency of the acute sector and that more people are passing through the system. However, they are doing so more quickly. That means that the burden of after-care falls on general practitioners and nursing staff in the community. I have received many representations from GPs, who say that they are unable to provide the level of after-care that is needed because of the needs of their other patients.
Clearly, more money needs to be spent to increase the number of trained nursing staff in the community to deal with after-care. There is no point in pushing people through the system faster if that leads to ill effects because of people being discharged from hospital to their homes too quickly with inadequate care being provided. It is ridiculous that over the past six months efficient units have had to close because of insufficient funds rather than work to relieve waiting lists for operations. No private industry would accept such nonsense, so I do not see why the National Health Service should.
The fourth sector on which more money should be spent is preventive medicine. It is more difficult to define the total sums needed in preventive medicine, to which the Government have rightly given priority in their White Paper on primary health care. The Government have not said that they will put money into preventive medicine, but considerable increases are clearly required. In that regard, one needs to think only of the vast increases in costs associated with tackling AIDS, developing screening services and the many other parts of preventive medicine that could have a real effect on the health of our people.
The fifth sector is information systems. It is clear that we need better information systems to be able to function effectively. To do so we need not only to develop computer systems—at present they do not exist in an effective form in the Health Service—but to staff them. I know of no health authority that can recruit the necessary staff because the wages paid are so low compared with those paid by private industry. If we do not get the staff to develop computers properly, we shall not be able to attribute costings properly or to take full advantage of the improvements in efficiency and effectiveness that would flow as a result.
The sixth sector, which is often overlooked, concerns alleviating low wages in the National Health Service, which directly contribute to ill health. When porters, cleaners and kitchen staff are taking home wages of £70 or £80 a week, clearly something is wrong with the National Health Service. There is no way in which a family can live on such an income. Rather than prate about taking people out of the tax net altogether, it would be better if they were paid enough to get back into it. That would at least give

those people some self-respect. People to whom I have spoken have told me that they would be only too pleased to earn enough money to be able to afford to pay tax.
The seventh sector was covered by my hon. Friend the Member for Dunfermline, East—the need to address the backlog of maintenance and repairs and the cuts in spending on essential equipment which have been such a feature of the National Health Service over the past few years. If we looked at hospitals within a five-mile radius of this Chamber, we would see peeling walls and damaged windows and stonework. That is what has happened as a result of the spending restrictions. Clearly, vast amounts of money need to be spent.
As a whole, I do not believe that the Select Committee's demand for £1 billion comes anywhere near reflecting the needs of the National Health Service. If I had a choice—I shall vote against these proposals—I would wish to see the money spent on the service in which I have worked for so long, which I thought would provide adequately for the people in this country but which, sadly, has not.

Mr. David Heathcoat-Amory: The hon. Member for Kirkcaldy (Dr. Moonie) made a Health Service speech. I do not wish to follow him except to observe that one justification for reducing income tax is that it often leads to an increase in tax revenue. That is one of the reasons why the Government have been able to increase substantially the funding of the National Health Service.
It is demonstrably true that tax reductions improve the supply side of the economy, which is how the Government have made additional allocations for the National Health Service. I noticed that the hon. Member for Kirkcaldy did not deny that point.
Opposition Members speak as though they have a monopoly of concern about these matters. The hon. Member for Durham, North-West (Ms. Armstrong) littered her speech with the word "morality". There is nothing moral about high taxation. The Labour party's idea of compassion and concern seems to be compulsorily to extract more money from citizens and redistribute it according to a centrally determined formula. That shows a touching and misplaced belief in the automatic efficiency and effectiveness of collective provision, as against the voluntary system of earning, saving and giving, which has been the engine of success of this Government.
My main reason for supporting the income tax reductions is that they tilt the taxation system in the right direction—in favour of earning and income. For far too long in this country it has been difficult, if not impossible, to build up capital out of earnings, which is why the savings institutions rely far too much on the tax privileges of certain forms of saving such as purchases of housing, through mortgage interest relief, and saving through pensions. Perhaps Chancellors will address themselves to those matters in future Budgets, but it is much better that everyone should keep much more of what they earn and make their own decisions about the form of savings that they wish to make, free of distortions from allowances and exemptions. The reductions outlined in clauses 22 and 23 go a long way in that direction.
Of course Opposition Members do not welcome these reductions. They look back., like fiscal dinosaurs, with nostalgia to the old days of high marginal rates of income tax. I look back on those days with mixed feelings because I am an accountant and I made a reasonable living out of


advising people to avoid penal—indeed, confiscatory—levels of personal taxation. The real damage done was that such tax rates gave every incentive to the taxpayer to pursue capital gains rather than earnings from salaries and wages. Coupled with clause 92, which equates the rates of capital gains and income tax, clauses 22 and 23 decisively end that damaging distortion.
Rather than making party political points, which would perhaps be more appropriate to a Second Reading debate, I wish to pursue the effect of the changes on the dividend policy of companies—a subject that I believe has received too little attention. When we had very high rates of income tax, shareholders naturally preferred to go for capital growth, taxed at 30 per cent., rather than receiving the profits of the company by way of dividends taxed at up to 98 per cent. As I said, the equation of the rates of capital gains and income taxes removes that bias.
I ask my right hon. Friend the Financial Secretary why it is necessary to retain the close company provisions on the statute book that continue to assume the opposite incentive—that is, that it is still in shareholders' interests to keep profits within companies rather than distributing them. I am sure that I do not need to remind the Committee that a close company is one controlled by fewer than a certain number of individuals or trusts. Before the war, such companies were very common because most of our big industrial concerns started as family companies controlled by comparatively few shareholders.
The difference in tax rates at that time between the standard rate of income tax, which applied to so-called registered companies, and the higher rates of income tax meant that those shareholders had every incentive to keep the profits within the companies that they controlled. It was therefore necessary to put on the statute book a range of anti-avoidance provisions, known as close company provisions, which, in certain circumstances, taxed those companies as though the profits had been distributed.
Close companies are now very much less common. By and large, they have been replaced by public limited companies with thousands of shareholders who do not have a direct and controlling influence over their distribution policy. More important, the alignment of capital and income taxes removes the incentive to keep the profits within those companies. It could be argued that under the imputation system of corporation tax, which we have had for about 15 years, it is in the interests of both shareholders and company to distribute profits because advance corporation tax, paid at the time when a dividend is paid, is allowable to shareholders as a tax credit.
By reducing the upper rate to 40 per cent., the Bill brings it down to very near the rate of corporation tax, which is 35 per cent. Therefore, there is now almost no advantage in accumulating profits within a corporate structure. Indeed, there may be a disadvantage. It is often overlooked that there is a potential double charge to capital gains tax if that gain is made within a company. The company pays capital gains tax once on the sale of the asset and the shareholder pays a further full 30 per cent. capital gains tax upon selling the shares.
I conclude that recent changes—in the Finance Bill and particularly in clauses 22 and 23—have completely altered the comparative advantage in holding appreciating assets

as an individual and holding those appreciating assets within a corporate structure. They have also profoundly altered the balance between keeping the profits within a company and distributing them by way of dividend.
If we combine those two factors, we find beyond question that the old incentive to use a non-distributing company as a way of sheltering income has completely gone. Yet we retain on the statute book a whole range of close company provisions that are complex to understand and expensive to administer. Therefore, I ask Ministers to consider reaping the full benefit of the simplified and lower tax rates that they are rightly putting before the House and to take an early opportunity to remove the close company tax provisions.

Mr. Alistair Darling: As I listened to the hon. Member for Wells (Mr. Heathcoat-Amory), I was reminded of a suggestion made just after the war, I think by Churchill, that there ought to be two Chambers of the House of Commons—one to deal with foreign affairs and one to deal with economic affairs; the two were entirely different. It seems to me that this debate is entirely different from last Wednesday's debate in which we discussed the plight of millions of people under the housing benefit changes. Today we hear of the plight of the poor shareholder denied his benefits and unable to shelter his income. Last week we heard of many people who simply do not have an income behind which they can shelter.
Conservative Members owe much to Samuel Smiles when they outline their economic policy for the 1980s. Samuel Smiles wrote a particularly turgid volume whose only point was contained in the first few pages. Conservative Members' policy may be fine in theory, but it has little to do with the reality of economics for most people in this country.
Opposition Members have been chided because we have not outlined our proposals for basic rate tax. There are arguments for saying that the basic rate should be much lower than 25 per cent. Some of us would argue that a graduated system would be more appropriate than what we have at the moment, which is almost a flat-rate system—especially when one considers the effect of national insurance. Certainly marginal tax rates are too high for the low paid and, I would argue, too low for the high paid. it is absolute nonsense to have a system under which somebody pays the same whether he is earning £19,000 or £9,000.
I resent the lectures that we have received on the plight of those who pay higher tax. We are accused of being a party that supports higher tax. When one considers that the percentage of tax and national insurance paid by the low paid has increased under this Government, it is clear that it is wrong to criticise us as a party of high taxation. Those on low incomes are paying more in direct and in indirect taxation than when the Government came to office.
Our beliefs about tax rates are properly the subject of another argument. We are discussing what should be done in the current financial year and the argument is about the division of wealth in our society. We are told that the country is doing well. For years, we were told that people


could not have more because the country was not doing well. Now that the Chancellor says that the country is doing well, more people should surely benefit.
We are witnessing a shift from the poor to the better off in society. We have had the benefits of North sea oil and the benefits, we are told, of the sale of nationalised industries, which we all used to own but which are now owned by a minority. Why should not all of us benefit rather than simply those at the top of the income scale?
We must also remember that those who have enjoyed tax cuts have benefited partly because of the £4 billion removed from those who are worse off. The question that we should address tonight is what could the tax cuts be spent on that might make some individuals not so well off directly, but might make everybody better off?
There has been much talk about incentives. I hope that Conservative Members will tell me why rich people need more money to make them work harder while poor people need less money to make them work harder. In talking about incentives, let us consider scientists. We are told time and again that scientists leave this country because of the incidence of personal taxation, whereas I suspect that scientists leave jobs in this country, especially in the public service, because we do not spend enough on infrastructure, resources or laboratories.
For example, a scientist neighbour of mine says that he will benefit from the reduction in the basic rate of tax, if it is approved by the House. But he complains that he does not have the materials or facilities for his work. That makes him consider leaving this country to go abroad. It is a question not of personal taxation but of the low value that the Government attach to investment as a whole.
The tax burden is disproportionately high on those with low incomes. Income is much more than cash in hand. The value of our Health Service, our schools, the roads, buses and transport costs all contribute to one's income. Perhaps it is a benefit in kind, although not a direct benefit. But we ought to consider it, as well as the negative effects. For example, electricity price rises come into the equation when one considers disposable income after meeting one's outgoings, in the normal course of life. When those indirect benefits are under attack from the Government, it is no wonder that we fear a reduction in the basic rate of tax to 25p.
Most people do not want to live in a dependency culture. In Scotland we are constantly told that we live in a dependency culture. That is why we did not vote for this Government. I understand from reading the press today that the Prime Minister will visit us more often. I welcome that because every time she comes to Scotland the Labour party does better. Indeed, it is a pity she cannot come to Scotland before the Thursday elections.
We do not want to live in a dependency culture because we are well aware of the fact that these tax cuts are paid for by cuts in the living standards of those who are less well off. We have to contrast the fact that some people will be better off as a result of the reductions that these two clauses would implement with the fact that more and more people will go to the social fund—that latter-day soup kitchen of the 1980s—for basic necessities. The Government have cut more than £1 billion from social security benefits. They will achieve that saving in the next five to six years. We have to contrast that with the fact that the minority of higher-rate taxpayers will be better off

directly. At the same time, the tax breaks and tax shelters, whatever one calls them, will still be available to the well-off.
When we discuss the effect of the two clauses, we should consider what else that money might have been spent on. Take child benefit. Since 1979, the real value of the benefit has fallen by 3 per cent. The failure to uprate it has meant that the Government have more money, which they can make available to the better-off. Indeed, the abolition of higher rate tax bands above 40 per cent. will cost £2 billion once they are implemented. That same money could have been spent on child benefit to increase it by £4·29 a week.
It has been said that one of the most effective ways of dealing with the problems of poverty and bringing help to children is through child benefit. That was said by the Secretary of State for Employment in 1982. If it was right then, surely it is right now.
It is the same story with pensions. Under the previous Labour Government pensions increased in real terms by 20 per cent., whereas under this Government they have increased by only 2·2 per cent. in real terms. I stress that the benefits given to the minority in this country who pay the top rates of tax, as well as the benefits of those of us who are fortunate enough to be working, are paid for to a great extent from money that is being taken from those who do not earn their income but are dependent on pensions or benefits.
It is certainly the case, as many Conservative Members have said, that this Government have increased expenditure in some areas—for example, the social security programme, which has increased by about 15 per cent. One has to remember, however, that more people are claiming benefits than in 1979, which is one reason why the amount of money that the Government spend has increased.
The Government say that we are spending too much. The answer is to reduce not the amount that individuals get, but the number of people who are forced to claim and to live in a dependency culture. That is illustrated effectively by the level of unemployment, which has increased dramatically under this Government. It is true that it is coming down now, although that has been achieved mainly by fiddling the way in which the figures are calculated.
Despite all that, unemployment in my constituency is still 20 per cent. A study has been carried out by Professor Sinfield at Edinburgh university, in which he calculates that the indirect cost of each unemployed person is about £6,557 a year. In my constituency in central Edinburgh alone it costs £33 million to maintain 20 per cent. unemployment. The money that we propose to give taxpayers by the reduction in basic and higher rates could have been used to prime the economy and get people back to work, thus reducing their dependence on unemployment and other benefits. The Government could have addressed their attention to that.
The better-off will get their tax cuts, which enable some people to buy their way out of trouble, whether they do so by means of a private operation or by buying education for their children. But the tax cuts are funded by cuts in the indirect income of the majority of people in this country. They are a benefit in kind to which people are entitled and which they value. Those indirect benefits have been eroded by the Government time and again. They believe in precious little provision of communal benefits and


services, and say that that money ought to be given to individuals who can choose to buy things because they have the economic power to do so.
All of us have a contingent interest in health, schools and all public services. That contingent interest is under attack, and has been attacked by the Government for many years. The price of the tax cuts is an erosion of that communal wealth upon which most of us rely, and which we want to continue to rely on and support. Public services in Britain used to be the envy of the world. That whole philosophy is under attack by the Government in their aim to give tax cuts to a minority. I do not begrudge people the extra money, particularly those on basic rates. Of course they will welcome it. But we must remember that, although they may get a few pence extra each week overall, they as individuals and we as a country are much poorer.

Mr. Barry Field: Higher-rate income tax has existed since 1973–74, when unified income tax replaced the previous income tax and surtax systems. Since 1978–79, the number of higher-rate taxpayers has increased significantly. In 1987–88 there were 75 per cent. more higher-rate taxpayers than in 1979–80 when the pattern of five higher rates from 40 per cent. to 60 per cent. was introduced. As a consequence, revenue from the higher rates has doubled in real terms. This growth in the impact of the higher rates reflects the fall in the higher rate threshold relative to average earnings.
In 1987–88 a married man started to pay tax at 60 per cent. when his income reached 3·8 times the average. In 1979–80 the same ratio was 4· times. These tax reductions show clearly that less tax equals more revenue. The desire to make everyone poorer to help the poor is part of the same dependency culture that requires every hon. Member to contribute to my wife's child benefit. The desire to spread a little jam thinly has been the bedevilment of our society.
I welcome the clauses, and I did so at the time of my right hon. Friend's Budget, when I said that lower taxes would create jobs in my constituency. It has done so. At the weekend I visited the boat yards in my constituency and the owners told me that they had had more inquiries and more orders than ever before. Some of those businesses date back scores, if not hundreds, of years. The craftsmen, the shipwrights, the timber yards, the steel works, the engine manufacturers and the electronics industry will benefit from that extra activity, which has resulted from the lower tax rates.
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My constituents know full well what it is to live in a low-wage, high-unemployment area. They also are aware of the benefits of low taxation because, biannually, the island witnesses the Admiral's cup series. Last year, incidentally, the first Japanese team visited the island. Every year the island witnesses the power boat race. My constituents see international wealth on their doorstep, especially when our EEC neighbours come over to compete in such races. In the past they have enjoyed a far lower tax rate than we did.
My hon. Friend the Member for Fylde (Mr. Jack) mentioned his days of wage negotiation. He mentioned the bottom line of the wage packet. He obviously comes from a far posher background than me. In my day the bottom

line meant accounts of businesses and wage packets meant stoppages. There is no doubt that the tax rates of previous years created a resistance to overtime. I encountered that time and again when I spoke to factory owners. When we had a lower rate of tax, the old disincentive was removed. Now that there are fewer stoppages, we find that there is a greater desire to work overtime in our factories and manufacturing industries.
I look forward to the day when Michael Caine cannot afford not to live in the United Kingdom for tax purposes. One cannot cut the taxes of people who do not pay any. There is no better monument to the most radical tax-cutting Finance Bill than the actions of the oldest Parliament of the Commonwealth, the Tynwald in the Isle of Man. That Parliament has taken fright at my right hon. Friend's Budget because it realises that Britain is fast becoming a tax haven. Its Bill, now awaiting Royal Assent, will retrospectively reduce the Isle of Man's rate of tax to 15 per cent. from 6 April. Such is the effect of the Budget and the tax clauses. That Parliament's action, more than anything else, clearly demonstrates the far-reaching revolution that my right hon. Friend commenced with his reforming, renowned Budget.

Mr. Ronnie Fearn: It is fitting, as the health spokesman for our parties, that I should contribute to this debate. I could find far better use for the money that the Chancellor has set aside for the tax cuts, not least the Health Service.
The Government's intention in the Finance Bill is clear. They intend to destroy the consensus that has been built up in the past 70 years. This consensus has meant the use of taxation to redistribute money from the better-off to the worse-off. It is 79 years since Lloyd George introduced his great budget which laid the foundations of the modern welfare state. It was a system based on fairness, whereby all citizens got a fair deal. I still believe that we have a long way to go to achieve that objective, and the Government seem determined to go in the opposite direction.
The Government argue that by removing the higher rates of income tax they will provide an incentive for the better-off to work harder. They provide no evidence for that—perhaps because there is none. In the New Statesmanon 25 March Mr. Russell Jones, an economist with Hoare Govett, said of the Budget:
There is no evidence to prove that a drop in tax from 60 per cent. to 40 per cent. will encourage people to work harder.
Why do the Government believe that one can make the rich work harder only by paying them more, but make the poor work harder only by cutting their tax? The Government do not have an economic policy. They are merely using the wealth of the country to reward their friends and penalise their enemies.
The billions of pounds that it cost, for example, to abolish the higher rate of tax would have been much better used to put an end to some of the most immediate problems facing the Health Service. It is an extraordinary situation when a Government can give away millions of pounds to the very rich in our society while waiting lists all over the country grow, ward closures are still a regular occurrence and some health authorities—notably in London—are forced to close all but emergency services and may even face total collapse.
I am sure that Conservative Members will say that they are doing something for the Health Service and that we should consider the nurses' pay rise. I naturally welcomed


that pay rise, but the Government behave as if they have shown the Health Service special favour by helping the nurses. In fact, every indication of the public's view suggests that they believe that the Government should fund nurses' pay rises fully as a matter of course, not as a special concession.
What really galls me about this debate—I have been present for most of it—is that the Chancellor had the chance to provide tax cuts and to do something about the dire problems facing the Health Service or the sickening growth of poverty. Instead of taking that option, which would have been the just and compassionate course of action, he decided to give the money to the most well-off in our society. That was, as many people have pointed out, an extremely bold thing to do, but I do not believe that it was admirable.
I feel sure that the Chancellor would not have dared to behave in such a callous way a year before the election. It is little wonder that we read that so many ordinary Conservative voters feel guilty about the tax cuts. I am not surprised. Many Conservative Members probably feel guilty, especially if their post bags, like mine, bring regular stories of unimaginable hardship brought about by the Government's changes to social security.
I find it ironic that, on the day before the Budget, I spoke on the Lords' amendments to the Social Security Bill. I highlighted the withdrawal of benefit to 16 and 17-year-olds. That was another retrograde step that could have been avoided by the Chancellor.
The whole basis of the Budget changes are retrogressive and reactionary. They seek to encourage greed and to help the rich at the expense of the poor. In the Government's mind we can see the vision of a society full of great wealth and of great poverty. The tax reforms, together with the poll tax and social security changes, represent the cruelness and callousness which are the Government's hallmarks. We shall have no part of that.

Mr. Anthony Coombs: As befits a party that spends most of its time shuffling backwards into the future, tonight we have been invited by the Labour party to enter into an era of high taxation, high expenditure and high Government borrowing—the Labour party's hallmarks in the 1970s.
It was interesting to listen to the hon. Member for Edinburgh, Central (Mr. Darling) talk about the division of wealth in society, and the hon. Member for Southport (Mr. Fearn) talk about consensus. Those were precisely the arguments used in the 1970s when, although we were obsessed with how wealth was divided, no growth was created to provide for the demands that were made upon it.
The Labour party talks about a consensus. The fact is that Britain, together with the vast majority of industrialised countries, is adopting low borrowing, low taxation, low Government spending policies. The only exception to that was France in 1982, just after President Mitterrand was elected. He embarked upon a huge rush of Government spending and a rush for growth, high Government borrowing and the nationalisation of industries. Two years later, as a result of those policies, France was forced to slam on the brakes in exactly the same way as the Labour party was forced to slam on the brakes in 1974–75, when the IMF had to come in.
it is instructive, given that the Opposition point at consensus as a paradigm of fiscal virtue, to look at the way

in which they ran the country, when corporation tax rates were 52 per cent., personal tax rates on the basic rate were 35 per cent. and upper rates were 98 per cent. At that time, the economy was sterile and unproductive and was called time and again "the sick man of Europe.
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Let us examine the statistics for the period over which the Opposition presided. Investment rose by only half a per cent. a year because people who were on higher tax rates were keeping only 2p in every extra pound that they earned. There was no risk cash nexus that would conceivably satisfy them, and justifiably so. Return on capital fell from 13 to 3 per cent. during the period of Labour control. As a result, productivity was only two thirds that of our OECD competitors. Small wonder, then, that Lord Shawcross, who had been a Labour Minister, talked about a hidden army of unemployment of about 2 million, because British industry was so hugely overmanned. The resulting inflation destroyed those same pensioners' savings that we have heard discussed today, with the shedding of so many crocodile tears.
The effective rate of taxation for average and low earners also rose because increases in income tax bands did not keep up with inflation, and a corollary of that was that our competitiveness, compared with that of our OECD rivals, fell, as unit labour costs increased by 117 per cent. in real terms in 10 years, while elsewhere they rose by only 45 per cent., so it was no surprise that we were locked out of the export markets that we had previously dominated.
Finally, the Labour Government borrowed 9 per cent. of GDP in 1975, which was a record. That meant that interest rates were so high that they squeezed the lifeblood out of industry. That is why the Government, together with virtually all our OECD competitors, have tried to recreate an environment in which enterprise, initiative and drive can flourish. That explains the huge increases in productivity in manufacturing industry—about 40 per cent. on average—in the past five years.
I recently went to an engineering plant in my constituency which makes wheels for the automotive industry and exports to companies such as DAF and Volvo. The plant has increased productivity in one part of its machine shop by about 30 per cent. in the past three months. As a result of the Government's policies, and virtually for the first time in 20 years, economic growth:is greater than the rate of inflation and we have had the fastest growing economy for the past five years. That is inextricably bound up—it is not merely coincidence—with the reductions in corporate and personal taxation that the Government have brought in.
It is not surprising that manufacturing investment has risen—by 6 per cent. last year—and is expected to grow by 8 per cent. this year. There is now an incentive for people to mortgage their houses and invest in plant and equipment. One gentleman in my constituency decided to take a stake in the company that he had previously managed and mortgaged his house to do so——

Dr. John Marek: If the story has been one of continuing success, as the hon. Gentleman claims, will he tell us when manufacturing investment will reach the level of 1979, when the Labour Government were last in office?

Mr. Coombs: At that time the increase in manufacturing investment made little difference to productivity and


competitiveness in the way that I have described. It is the end result of what is done with investment, rather than the amount put in, that is important. Lower income tax rates are the reason why, for instance, my local chamber of commerce, which has done a survey on local firms since the Budget, found that 90 per cent. expect to maintain an increased turnover, that 60 per cent. expect to increase their profitability, and that 90 per cent. expect to maintain or increase their employment as a direct result of the tax-cutting regime that the Government have introduced.
It was interesting that when the last survey was done by chambers of commerce in the west midlands, the one item that they wanted the Government to take care of above all at a national level was the introduction of lower income and corporation taxation. We delivered on income tax, and they are justified in being well pleased.
Opponents of the reductions in tax that we are discussing use two arguments. First, there is the transparent arguments that the cuts are regressive. We have heard already that since the Government reduced the higher rates of tax from 98 to 60 per cent. the top 5 per cent. of taxpayers have increased the amount that they pay from £5 billion a year to £12·5 billion, and that the proportion of the total that they pay has risen from 24 to 29 per cent. Furthermore, these tax cuts will benefit all 25 million taxpayers. As a result of doubling taxation allowances, 750,000 of them will be taken out of tax altogether. If the Opposition are in favour of lower taxation, why did they not introduce it? If we had kept the same real levels of tax bands as were in place when they left office, 1·7 million more people would pay tax now.
The second argument that the Opposition use is about the impact of lower taxation on the balance of payments. Of course, there is bound to be some impact in the form of export substitution and increased demand which will, to a certain extent, suck in imports, but the projected deficit of £4 billion in 1988–89, at 3 per cent. of GDP, is sustainable in a healthy and growing economy. The way to improve that figure is not through fiscal policy and increases in taxation, which will inevitably damage incentive and home demand, on which a large proportion of the basic parts of our manufacturing industry depend. The Government have taken action to stabilise exchange rates over the past two months by lowering interest rates, and that is what the policy should target. Eventually, I hope that we will join the EMS and make these sorts of interest rates more automatic than they now are.
We have also heard the argument that lower taxes allow an increase in resources. That must be self-evident, given that lower corporation taxes have allowed a £5 billion excess of revenue over the past year. It was interesting to hear the hon. Member for Kirkcaldy (Dr. Moonie) speak of the lack of investment in the National Health Service. It is precisely this Budget that has allowed us not only to invest £1·1 billion more in the Health Service—the largest increase in monetary terms in NHS history—but to add to that by £700 million from a contingency reserve that depended on tax revenues that were engendered by lower taxation rates.
Most important of all, a number of factors point to the confidence of the business community—the people who provide jobs—in the taxation regime of this and other Budgets introduced by the Government. CBI News called

the Budget "A Budget for Growth". The CBI did not receive any reduction in corporate taxes in the Budget, but reckoned that the lower income taxes would give it the basic home market in which to sell and in which to continue its increases in productivity and profitability.
The Budget gave the incentive to grow to the 500 new businesses that are springing up every week. It created the environment for the sustained growth that has made our economy the fastest growing in Europe over the past three years. The Bill provides the basis on which we can continue the reductions in unemployment that have occurred for the past 20 successive months. It also gives industry confidence. That was shown by David Nickson, the president of the CBI, who said:
Industry is starting to succeed in a better environment than it has known for some time.
That is a direct result of the tax-cutting regime instituted by the Government.

Mr. Morgan: Did he say that as well?

Mr. Coombs: No, but the implication was clear, as has been the implications through the Budget. It was a Budget for growth, prosperity and confidence for industry. That will lead to jobs and higher living standards. As we have seen over the past nine years, there has been a 27 per cent. increase in living standards for the average man. It will give hope to those on lower incomes that they can escape the dependency culture, and it will regenerate the confidence in industry that I have already described as occurring in my constituency.
If any further evidence of the importance of a low tax regime is needed, it can be seen in the relative figures since 1973 for the European Economic Community and the United States. Since 1973, with 50 per cent. of GDP taken in Government expenditure, the EEC, with a population of 300 million, has increased the number of jobs by about 1 million. In the United States, with a population of only 200 million, and with only one third of GDP taken in taxation and Government expenditure, the total number of extra jobs since 1973 has been 27 million, and 14 million in the past 10 years.
In short, a tax-cutting regime is essential for a dynamic, flexible and incentive-led economy. Lower taxes in an increasingly competitive international environment are no longer just an option, but a vital necessity.

Mr. Andrew Smith: We have heard many extraordinary claims, but I must focus on the claim that the cuts in income tax by the Government have led to an increase in manufacturing investment. They may have led to many things, but they have not led to an increase in investment in manufacturing industry. That is why the hon. Member for Wyre Forest (Mr. Coombs) was so bereft of an answer when questioned by my hon. Friend the Member for Wrexham (Dr. Marek).
The hon. Gentleman attempted to advocate the Budget and the content of the Finance Bill. Many Conservative Members have not done that. They have spent their time attacking what Labour Chancellors did in the past or hypothesising about what Labour Chancellors will do in the future. Conservative Members are equally uneasy about the economic consequences of the Finance Bill and the Budget as they are about their social consequences.
We are dealing with some of the most vicious parts of an unjust and vicious Budget. Clauses 22 and 23 are


morally and fiscally indefensible and, as increasing numbers of Conservative Members have come to realise, politically indefensible.

Mr. John Townend: As the hon. Gentleman is considering morally indefensible matters, does he believe that a marginal tax rate of 98p in the pound, leaving recipients with 2p, is morally defensible?

Mr. Smith: I do not find it morally defensible to cut the marginal tax rates for the very rich, while those stuck in the poverty trap have an effective marginal tax rate of 80 or 90 per cent. That is not justifiable.
In the attempts by the Conservative Members to justify the unjustifiable, we hear the most remarkable arguments that defy economic logic and common sense and contradict their own stated objectives. Let us consider those much-vaunted claims that reduction in the higher rates of tax result in greater enterprise and effort. What is the evidence for that? We have had no evidence for that whatsoever, and, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) pointed out, the elusive lecturer Lindsey did not provide any evidence.
It is not good enough simply to claim that the top 5 per cent. of taxpayers will contribute a larger share of taxation. In itself, that proves nothing. Far from proving that the richest directors are working harder, it may simply show that they are finding it more worth while to pay themselves lavish increases, while holding down the wages of their employees. There is plenty of evidence from the new earnings survey that that is precisely what they have been doing since 1979. The 20 per cent. highest paid men have secured pay rises 42 per cent. greater than the lowest paid.
To make any sense of the claims about the share of revenue contributed by the top 5 per cent. of taxpayers, we must consider what is happening about the distribution of incomes and the share of tax revenue which income tax comprises. If, as is undoubtedly happening on the evidence of the new earnings survey, the very rich are able to get their hands on an increased share of the national income, their share of income tax collected will increase, even though the share of their own individual income falls. Similarly, as the share of the total revenue which income tax comprises falls compared with other taxes, the Chancellor can levy income tax on the very rich ever more lightly, at the same time loudly' proclaiming their increasing share of the total income tax take.
Indeed, if almost all taxation were collected through VAT—something I fear might appeal to some Conservative Members—and we levied income tax only on millionaires, the very rich would pay all the income tax, just as they would if the top 5 per cent. of taxpayers managed to cream off almost all the nation's income. It would not prove that such a tax regime was good for the country or that it was compatible with any sense of social justice. It would say nothing about incentives, or about how hard or otherwise the very rich were working, or who deserved what. It would simply tell us that the distribution of income and taxation was very unfair, which is precisely the position that we are in now and were in before the Budget, with the top 10 per cent. keeping more income after tax than the bottom 50 per cent. of the country put together.
How much incentive do those people need? I have always been sceptical about the claims made for the

incentive effects of tax cuts at high income levels. We hear those claims trotted out every time a Tory Chancellor gives a tax break to the very rich. If the Government believe that they will receive a proportionate increase in effort for each of the cuts that the Government have brought in, those in receipt of the highest incomes must have been doing less than nothing to earn their already generous salaries when the Government started. Besides, we are always told that those high salaries were necessary in the past precisely because taxation was so high. I wonder how many people have been awarding themselves compensatory pay cuts because their taxes have fallen.
Let us suppose that there is something in the incentives argument and that all the richest income earners are precisely as calculating as the Government suppose. It is clear that any rational assessment of that incentive argument needs to distinguish between marginal and average rates of taxation. I have not heard Conservative Members agreeing to that.
Given that there are good grounds for supposing that, one will have an opposite effect to the other, if indeed there is any effect to be had. If average rates of taxation fall, people will have more money for the same work and could easily afford to give up an hour for leisure. At least some of our highly paid directors, being rational, cost-sensitive, market-orientated people, will work less. On the other hand, if marginal tax rates fall, the cost of that extra hour of leisure is increased in terms of income and the calculating director will work harder.
If Conservative Members wish to construct an argument about incentives, they must consider the tax changes in relation to marginal and average tax rates.

Mr. Hind: Will the hon. Gentleman give way?

Mr. Andrew Smith: No, I shall not give way.
For the very rich at least, the Chancellor has cut both average and marginal tax rates. He has thereby condemned the very rich and highly paid to sleepless nights with their calculators working out whether the higher amount that they can earn from an extra hour's work more than offsets the greater leisure that they can afford from their higher income from doing no work. That is nonsense, and so is the incentive argument at those levels of income.
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The fact is that the Chancellor could have eased the burden of that difficult calculation on the very rich by banging up their average tax rate even as he cut the marginal rate by reducing the real value of their allowances. For example, he could have made the personal allowances for the highly paid the same as for basic rate payers. He could have limited mortgage rate relief to the basic rate. However, the fact that he chose not to do that reveals a disdain for the real theory of incentives equalled only by his disregard for elementary social justice.
The Government had better be more careful about their use of international comparisons. Those comparisons, show that the cuts in higher rate taxes in Australia and even in the United States have been accompanied by closing tax loopholes and hitting fringe benefits harder. In contrast, the cuts in this country have been accompanied by larger tax breaks in personal equity plans and the business expansion scheme with more new opportunities in


the Budget through the increase in the capital gains allowance for a married couple and the extension of the business expansion scheme to private rented housing.
Taken with the continuing generosity of tax reliefs on pension contributions and mortgage interest relief for higher rate taxpayers, those breaks dwarf into insignificance the changes that were made with regard to forestry and company cars. They leave this country with some of the biggest loopholes as well as the most generous taxes for the very rich. International comparisons merely highlight the particular injustices of the tax changes. They similarly highlight the manifest injustices and nonsense of the Chancellor's decision not to alter the way in which national insurance operates. It is especially and appallingly unfair that the lowest paid should pay more in national insurance than in income tax and are subjected to wholly unjustifiable and indefensible marginal rates of taxation.
Indeed, the increasing burden of national insurance rates imposed by this Government is in no small part responsible for the fall in the share of post-tax income going to the lowest 50 per cent. of income earners whose share of total incomes has fallen from 26·2 per cent. in 1978–79 to 24·9 per cent. in 1984–85.
Moreover, notwithstanding all the Chancellor's claims to have simplified taxation so much, national insurance also interacts with the income tax system to produce changes in marginal rates higher up the income scale for which there is neither rhyme nor reason. What on earth is the justification for allowing the effective marginal rate of taxation to fall from 34 per cent. to 25 per cent. at the national insurance upper threshold of·15,860? There is no reason for that.
The fact is that even before this Budget the rich were doing better relative to the average than they had done for the past 80 years. At the same time, the poorest one fifth of manual workers have fallen further below the average in income terms than at any time since records started being collected in 1886. The huge higher tax cuts in the Bill are totally without justice or justification. The Government are gratuitously rewarding the rich just as they are penalising the poor. They are doing nothing to lighten the total tax burden on the average income earner which we emphasise has continued to rise. Moreover. I believe that this Finance Bill will rebound on the Government politically as more people realise that it is nothing more than legislation in the interests of the very rich at the expense of everyone else.

Mr. Gerald Howarth: If the hon. Member for Oxford, East (Mr. Smith) believes that the Budget will cause unease on the Conservative Benches in its economic consequences, he is even more out of touch with reality than the rest of his speech betrayed him to be in his understanding of ordinary human nature and incentives.

Mr. Hind: Unlike his predecessor.

Mr. Howarth: Indeed, as my hon. Friend the Member for Lancashire, West (Mr. Hind) has said, his predecessor never fell into that trap. I hope that the hon. Member for Oxford, East understands reality because, if he does not, his predecessor may be back in this place. He would be most welcome on the Conservative Benches.
The most important point to understand about the Budget is that it is enacting a long-standing principle to which the Conservative party has been wedded from the outset—to reduce the burden of taxation on every level of income. That is what this Budget seeks to do.
I strongly welcome the tax changes announced by my right hon. Friend the Chancellor of the Exchequer. I encouraged him to continue the progress to reduce the basic rate of taxation from the inherited 33p in the pound all the way down to 25p. I would not suggest that mine was the only voice to which the Chancellor listened, but I am happy to say that mine was one of those to which he listened. It was the overwhelming view on the Conservative Benches that progress towards reducing the basic rate of taxation should continue.
I also warmly welcome the reduction in the top rate of taxation from 60 per cent. to 40 per cent. I am delighted that that begins to bring us into line—as I am sure that the hon. Member for Walsall, North (Mr. Winnick) who has just arrived in the Chamber will realise—with the USSR, a country and a system with which the hon. Gentleman has a great deal of sympathy.

Mr. Winnick: On a point of order, Mr. Crowther. The hon. Gentleman has said that I have a great deal of sympathy with the Soviet Union. I ask for your protection on the basis that I am one of the most active people in the Labour movement constantly protesting against the violation of human rights and the abuses that occur in the Soviet Union. I shall continue to protest about those matters. Will you request the hon. Gentleman, if he is an hon. Gentleman, to withdraw his remarks immediately?

The Temporary Chairman: In the first place, I do not believe that that is a point of order. In the second place, I do not believe that the hon. Member for Walsall, North (Mr. Winnick) needs my protection, as he is perfectly capable of defending himself. In the third place, I do not think that there was anything unparliamentary in what was said.

Mr. Howarth: In the interests of the Committee, I should be happy to tell the hon. Gentleman that I am delighted to have his assurance on that point. However, every time that the hon. Gentleman speaks in the House of Commons, one gets the strong impression that he is very sympathetic towards the draconian systems that apply in that part of the world. I know that he will have plenty of opportunities to disabuse us on that in future.
Many of my right hon. and hon. Friends have argued that there is nothing moral or worthy in high taxation. We have heard Opposition Members arguing tonight and previously that somehow they have a monopoly on morality and that Conservative Members are concerned only with economic gain and the theory of "get rich quick". That was the essence of the case made by the Opposition Front Bench spokesman. I am glad to see that the Opposition Members are nodding agreement. Conservative Members utterly reject that.
What we are trying to do with the basic rate and the high rate of taxation is completely moral. There is no morality in trying to impose draconian taxation on our people. There are two practical effects of such taxation. It leads to far greater evasion and a growth in the black economy. Indeed, the black economy is now entrenched in our culture and it is taking many years to wean the nation away from it.
Reference has been made tonight to the brain drain. Most people in this country have forgotten what happened in the 1960s, when many talented people left these shores to seek a more conducive economic climate in which to live, free from the shackles of Socialism and the nanny state which Socialism brought with it. If the hon. Member for Oxford, East wants evidence of the incentive effect of reducing taxation, I invite him to read an article in the Financial Times. Perhaps it is not the most Tory of newspapers but, even so, it said that the tax changes were likely to make Britain an even more attractive place in which companies and individuals could do business. It commented:
Headhunting agencies and accountants expect a keener response when they try to entice overseas executives to work in the UK … the new tax structure could also reduce the number of top earners leaving for more profitable shores such as Singapore, Hong Kong and the Middle East, where tax is minimal.
The hon. Gentleman may reject that suggestion as being merely an attempt to attract jobs to the City. However, increasingly we find that in the world of financial services, one can carry on business at any of a number of financial centres throughout the world. It is greatly to the credit of the Government that Britain's pre-eminent position in the financial world has been maintained as a result of the taxation policies that they have pursued, to ensure not only that the City of London is a good and efficient place in which to do business but also that the United Kingdom is a country worth living in and in which one does not have to pay penal rates of tax.
I say to the hon. Member for Oxford, East and his colleagues that if, heaven forbid, the Labour party were ever to return to power, saddled and burdened with the policies of the 1960s and 1970s which Labour has yet to shake off, it will find a flight not only of capital before it can reimpose exchange controls but also of talent. It will inherit a barren land.
It is only on the effective management of this nation's overall economy that the success of the past nine years has been built. That success is not entirely the doing of the Government, because they can only create the right framework and climate. It is the people of this country who have affected that economic revolution. Power has returned to the people, who have decisively rejected all the policies of Opposition parties of varying descriptions.
What concerns me in this debate is the thinly disguised contempt of some Opposition Members for success. I refer to the sneering way in which the hon. Member for Walsall, North, who is a neighbour of mine, referred to the "rich". It serves as a word of utter abuse in his vocabulary. It is as though the Opposition do not want people to be successful or to be rich.
Indeed, the hon. Member for Dunfermline, East (Mr. Brown), with a note of contempt in his voice, spoke at the Dispatch Box of how the savings made as a result of the tax cuts might be spent on boats. I sought to intervene, and apparently caused amusement on the Opposition Benches by mentioning that the business of one of my constituents, who employs 150 of my constituents in building power boats in the middle of England, had increased 50 per cent. in the past year. My hon. Friend the Member for Isle of Wight (Mr. Field), who is no longer in his place, built on my remarks by commenting that the south coast boat-building industry has also enjoyed an enormous boost.
The Opposition do not like the fact that people are choosing to spend their money on boats rather than in ways that the Opposition would like. However, expenditure on boats is directly generating jobs. It is disgraceful of the Opposition to attack a business which, I remind Opposition Members, is not subsidised by the taxpayer—unlike, on a bigger scale, the shipbuilding industry.

Dame Elaine Kellett-Bowman: Does my hon. Friend not find it astonishing that the Opposition have so little faith in the capacity of British industry to produce what the consumer wants and believe that every time there is a tax cut people will spend their money on foreign goods? The CBI survey clearly shows that British-made goods are taking a larger share of people'sextra money—as is the case in the boat-building industry mentioned by my hon. Friend.

Mr. Howarth: My hon. Friend is right. At the heart of this debate is the dislike of Opposition Members for the power of the market place, which is anathema to Socialism. Opposition Members do not like people making their own decisions and choices because the basis of the system which they espouse, and which has been so decisively rejected by the people of this country, is one in which money is taken compulsorily from the people and redirected not according to where the public think fit but where Opposition Members think fit.

Mr. Winnick: As the hon. Gentleman has an almost obsessive interest in bringing me into his speech, and a.s our constituencies are indeed adjoining, may I ask how many of the hon. Gentleman's constituents have lost out in housing benefit, and how many more would have lost out had it not been for public pressure and the strong opposition of Labour Members of Parliament, which forced the Government to climb down?

Mr. Howarth: Of course some of my constituents have been adversely affected by the reduction in housing benefit, but that is because, as in so many other instances, the Government have grasped the nettle of a very difficult problem. We not only introduced housing benefit, but it increased fourfold under the present Government. Even by the hon. Gentleman's criteria, this Government score. I shall not entertain any lecturing from him.

Mr. Hind: rose——

Mr. Howarth: I had better not give way because I know that others of my hon. Friends wish to contribute to the debate.
Further to what was said about consumer choice, it is a fact that, as a result of people having more money in their pockets, they are more willing to give to charity. Every Opposition Member will have in his or her constituency a worthy charity. That industry is now worth £13 billion per year.

Mr. John Smith: Charity is not an industry.

Mr. Howarth: It is an industry in the sense that it is an area of activity. I use the word in that sense. The average spending on charities per household is now £70 per year, which is an increase of 74 per cent. in real terms since 1980. That indicates that if one gives people choice, they know


how to spend money far more effectively than Governments ever will. The public are much clearer in their minds as to what is deserving and what is not.

Mr. Charles Kennedy: rose——

Mr. Howarth: I did not give way to my hon. Friend and I want to close now, because I know other hon. Members wish to speak.
These proposals demonstrate the Government's continuing commitment to do all they can to create the right framework in which our economy can be revitalised. We have seen record spending on those in need. We have helped the entrepreneurs and the wealth creators, without whom we would have no public services in this country. We have helped, as was said by my hon. Friend the Member for Wells (Mr. Heathcoat-Amory), middle management, those who want the opportunity to build up capital—an opportunity that was denied to them by the Labour Government—and those on the basic rate of taxation. Furthermore, in this Budget we have taken another 750,000 people out of taxation.
I can do no better than cite the words of a foreign newspaper, the Wall Street Journal, which made what I believe to be the right response to this Budget when it commented:
The winners will be the British people, at all levels of income, and in all regions of the country.

Mr. Worthington: We believe that there should be a progressive taxation system and that we do not have one. Even the formal system of income tax, with a range of 25 to 40 per cent., is far too narrow. Conservative Members have failed to demonstrate that the tax cuts given to higher earners have fuelled any economic growth. It has constantly been said that cutting taxation rates has generated, more income. What Conservative Members have failed to point out, although it was partly pointed out by my hon. Friend the Member for Oxford, East (Mr. Smith), is that people on tax rates above 60 per cent. largely set their own incomes, deciding what to pay themselves. A consequence of that can be seen from any financial report of recent years. Those are the people who have received the most massive increases in salary or other payments.
There is another factor to be taken into account. The top 5 per cent. of income tax payers, who, it is said, have now generated more income, are not composed only of those who were paying rates of above 60 per cent. It includes many who have moved into the group paying between 40 and 60 per cent.—the group whose tax rate is now to be reduced to 40 per cent. It is simply not true to say that the same people are now paying more tax because of the changes.
There has been no proof of a link between income tax cuts and economic growth. Other factors have been neglected, such as privatisation, North sea oil and the role of consumer debt in fuelling economic growth. Interestingly, I cannot find a Conservative Member who is willing to say how much he has gained from the Budget, and what he has done with the extra money. Conservative Members will not say, first, because they wish to conceal it—that is a tradition—and, secondly, because, in many instances, they have not thought about it. I have enough

respect for the higher earners on the Conservative Benches to think that they do not know how much they have gained. They have not worked it out, or decided what to do with it. They certainly will not go around looking for a means of risking their money. It has gone into their portfolios. It will be going into stocks and shares in this country as a standard investment, and will not be involved in the generation of the country's wealth.
The Government talk about incentives for the elite. I was struck by what was said earlier by my hon. Friend the Member for Dunfermline, East (Mr. Brown). He talked about 1 per cent. having obtained 31 per cent. of the tax benefits of the Budget, and said that that 1 per cent. represented about 200,000 households. Those people are already in a position to set their own incomes and incentives.
In last week's Second Reading debate, there was an objection when one of my hon. Friends said that the top 1 per cent. had hijacked their companies. There is a real sense in which the top 1 per cent.—whether in a firm, among National Health Service consultants or among lawyers—can set their own wages, and those of their own kind. They have already decided what they are worth.
I share the feeling of many Opposition Members about the obscenity of many firms' judgment about what their top executives or consultants are worth. They set expenses at absurdly high levels to profit from them. They set up their own private health schemes, frequently at the firm's expense.Their children's education is subsidised by the Exchequer to lower their tax burdens. Despite this Budget, their transport is still subsidised by the state. Their entertainment and their days out are subsidised as expenses.
I hope that all the boats that have been referred to are being paid for by individuals, and that the firms are benefiting. I suggest, however, that a good many are likely to have been bought by firms for their senior workers and dealt with on that basis.

Mr. Hind: rose——

Mr. Worthington: I shall not give way at this stage.
Pensions are subsidised, and it is arranged for them to he non-contributory. Compensation for anything that may happen to employees is arranged in the form of handshakes. In an untargeted way, they receive mortgage interest relief not on the basis of need but as of right. They have access to cheap credit. They set own performance rewards, and their own shares are purchased for them.
Those are the realities. The top 1 per cent. are already controlling their economy and their assets; then they get the Chancellor to give them the icing on the cake. As my hon. Friend the Member for Dunfermline, East pointed out a few weeks ago, it is not impossible in this country to have an income of £1 million a year and pay no tax whatever because of the schemes set up by the Government. Every shift that the Government have made in the taxation system has benefited them, and no research has been undertaken to demonstrate the worth of that to the country.
I was struck by the Financial Secretary's statement last week that redistribution had been chosen, used and thrown away, because it did not work. We are entering, very seriously, the era of redistribution of income, but it is


redistribution from poor to rich rather than the other way round. The Government have achieved a scale of social engineering that has never been attempted before.
In none of the spheres that I have mentioned is there any talk of targeting and need: it is just give. The move is all towards a more regressive system. The poll tax is an example, in that those who are most well off will pay least. We also know that the poll tax will substantially increase property prices, so that in the more prosperous areas a house that would have sold previously at £200,000 is likely to increase in price by about 10 per cent., or £20,000. Another gift of capital is provided by that regressive tax system.
Two things happen to the people who benefit from this. First, they believe that they deserve the money that they earn—that they have unique talents, which are curiously invisible to the rest of us. Throughout my life I have looked for those unique talents in the captains of industry, and have found myself curiously disappointed. Secondly, they suffer from an immense poverty of imagination about the life being led in the rest of the country, the life that must be led by those who have not much money. Someone who feels that he can spend £50 on a meal finds it impossible to imagine what it is like to have £50 as a weekly income.
Conservative Members have constantly described the present Government as a tax-cutting Government, but nothing could be further from the truth. Even the Government are forced to admit that on occasion. What they are talking about is tax cuts for those on the higher income levels. We know that in 1987–88 taxes formed 37·9 per cent. of GDP, and that in 1978–79 the share was 33·9 per cent.
In 1978–79 a one-earner couple on average earnings with two children paid 23·5 per cent. of their income in income tax, national insurance contribution and VAT. In 1988–89 the figure will have risen to 25·1 per cent. for that typical family.
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The tax rates for people at the other end of the scale have gone up dramatically. My hon. Friends the Members for Edinburgh, Central (Mr. Darling) and for Oxford, East have spoken about that, so I shall not go into great detail. However, in the past eight years council house rents in Scotland have increased by 198 per cent. One might argue that there is a housing benefit system for those people, but fairly typical people in my constituency are getting a £2·50 increase in their pensions of which they lose about 91 per cent. because of the cuts in housing benefit.
Effectively, those at the lower end of the scale are being taxed at a much higher rate than they previously had to suffer. Therefore, particularly among poorer people, there is a mounting degree of personal debt. I hope that we can look at that problem in more detail in Standing Committee. There is certainly concern in Scotland in terms of the inquiries to the citizens advice bureaux in the past few years.
In 1983–84 there were 13,000 cases of consumer debt. By 1986–87 there were 42,000. such cases. I do not wish to make a party political point, but I feel that hon. Members on both sides of the Committee should take much more seriously the issue of consumer debt. All political parties must try to find a cheaper way of financing credit for those on average and below average incomes.
The only examples I know of that work are the credit unions which curiously have been neglected in this country compared with the United States of America or Ireland. Credit unions are formed where there is a common bond between people in a neighbourhood or people who work together. They form savings unions and grant each other credit. Some of the most successful credit unions in this country involve people who work in the transport industry, in taxis or in the police force.
In my constituency, the Dalmuir credit union, which has 1,900 active members, lent £300,000 last year. Ordinary people lent £300,000 last year and over a 10-year period they have lent £1 million. The interest rate is such that, if one borrowed £100 now, one would have to pay back £106·25 in a year's time. That contrasts with the interest rates that one would have to pay in other circumstances. In that £1 million they had £19,000 of bad debts—less than 2 per cent. That is staggering.
One case that came to the union's attention last week involved a woman whose marriage had broken down. She had more than £2,000 in debt and was paying firms £290 per month. That was reduced to £100 a month by using the credit union.
Hon. Members on both sides of the Committee should be much more concerned about the mounting misery that is being caused by intolerable levels of personal debt. They should be seeking to get people out of the grip of a financial system which, frankly, crucifies them. I hope that hon. Members will consider this matter. I mention it because absurdly, at the present time, credit unions are stuck with a credit limit of £2,000. It would be of no cost to the Exchequer to allow them a more generous credit limit. For example, if a taxi driver wished to buy his cab, £2,000 would go nowhere near financing the purchase. We should consider adding a new clause to the Bill which would allow more generous credit limits for credit unions.
In summary, a point that I want to make with some force is that we must stop talking about Britain's taxation system having a progressive element. We cannot do that any more because when we look at the combination of taxation and benefit systems we find that we have a highly regressive tax system, a review of which is long overdue.

Mr. Roger King: If I were to ask any of my constituents how they felt about the Government's tax cut policy, I am convinced that they would willingly support it, as they did in 1983, and again in 1987. I prefer to tell them that the Government have just given them not 2p in the pound off their income tax, but 8p in the pound, which amounts to a great deal to the average British worker.
I cannot understand any political party saying that that is a bad thing. Nurses, car workers and many other members of our society who do middle to low-paid jobs have benefited substantially since 1979 from a reduction in taxation. It is morally indefensible to say that that is a bad thing and that we are immoral to introduce such a policy.
Of course, we understand that by following a policy of tax reduction we are taking away one of the basic tools of Socialism, which is to tax people and to redistribute it according to the priorities of that political party. It is the party that decides who to bestow its largesse upon.
Reductions in income tax merely increase the desire to work. One of the problems within our community is the


black economy: the pound in the back pocket rather than the pound earned honestly. A policy of lower and lower direct taxation must be the way forward.
Cuts at the top end are not necessarily beneficial only to those who are earning large sums of money—the so-called Ralph Halperns of this world. It does not matter very much to them, but it is a clear sign to all those hard-working members of our society that monetary awards are available. They have a target to achieve. That is what we have set out to achieve in our community and the investment and dynamism now prevalent in our economy is proof for all that our policies are right.
Those at the top end of the salary scale in the bad old days of the Labour Government were taking their rewards in fiddles, in tax perks, in cars, in houses and all the other things that we knew were wrong or immoral. Now, as a result of our tax cuts, more and more are taking their reward, as it should be, in monetary remuneration. That is the only sensible way of rewarding people.
The Labour party encourages the fiddle society—the people who believe that the only way to prosper is to try to fiddle the tax man because they do not want to pay the ever more penal rates of tax levied upon them. That is the policy of the Labour party.
The Labour Government set an immense track record. They created the selective employment tax to get more taxation out of people. When that did not work, they created the national insurance surcharge, a payroll tax which destroyed hundreds of thousands of jobs in Britain in one fell swoop. That is another tax that we have cut. Surely Labour Members are not saying that our action in cutting that tax is immoral.
Twenty-five million people have a great deal to thank the Government for in the reduction of taxes. The 40 per cent. element is a guiding light for those who want to attain prosperity within our community. It can now be achieved much earlier.
We can see that our taxation policy is proving successful, nowhere more so than in the west midlands. We have a regional newspaper which last year published 26 pages of job advertisements. Last Thursday there were 32 pages of job advertisements. The opportunities for people to take up employment now are as never before. As one looks around, one can see the investment going into our cities and manufacturing processes.
It has been said that we do not have the same investment that we had in 1979. One has to look back over the few years before 1979 to get a direct comparison. I maintain that investment in British industry has never been higher year by year as an on-going process. Those of us who visit our factories and our industries can see the amount of investment that has gone into them; and as our economy expands, so we have more resources for health and social services.
On the doorstep in the local election campaigns the message has been coming back loud and clear that people understand what we are doing with our economy and in creating the real wealth. They understand the incentives that we have introduced for people to work and get a fair reward for their work. They also understand the direct connection between the wealth-creating process and the ability to spend on our national services in health, welfare and housing and in our cities. They understand that,

without the incentives that we have continued to provide over the last eight or nine years, none of the things that we want to achieve as a society can be achieved.
I said to a number of people on the doorstep who felt that they were already getting enough in their back pocket or in their wage packet that, if they wanted to decline their tax cuts, they could do so. The system that we have sets a minimum amount of tax that has to be paid, and I told them that if they wanted to pay more they should by all means make the necessary arrangements with the Inland Revenue.
I believe that the Government are well on course towards achieving the sort of community, society and prosperity that we want, and I applaud their progress.

Mr. Morgan: It is clear that most Government Members have a very strong belief in the causal relationship between lower taxation and higher economic growth. They may not know what the causal relationship is, but they certainly have a powerful religious fetishist belief that there is such a relationship.
If they really believe that this relationship holds good at all levels of taxation, they will be voting against the Government tonight, because they will believe that the Chancellor should have cut the tax rates not to 40p and 25p but to, say, 25p and 15p and that the only reason why the Chancellor did not cut tax much more was that he was worried about the wall of money that would hit him from the higher tax receipts that he would get. After all, if the belief is exactly as we have had it put to us by Government Members throughout this debate—that lower taxes mean higher tax revenue—why is it 40p and 25p? Why was not tax cut this year to a much lower figure?
I presume that Government Members do not believe that if tax was cut to zero one would get more revenue. Nobody has produced any calculations that indicate that if taxation were cut to the utmost, to 0·1 per cent., that would maximise and optimise the tax revenue. Unfortunately, the Chancellor of the Exchequer would not know what to do with all the extra money that he would get if he cut the taxes by twice as much, so he has got it dead right, they think.
All that Government Members have told us is that they are party loyalists. It does not matter what the level of taxation is; whatever the Chancellor said it would be in the Budget must be the right level. It is not the wall of money that I have referred to as the fear in the Chancellor's mind that is the major problem, but the way that his lower taxes have pushed him into a corner as regards the macroeconomic effect of lower taxation. If he had not skewed the economy so badly by cutting the top rates so sharply and cutting the basic rate modestly, he would now have much greater room for manoeuvre and ability to play around with interest and exchange rates. He has run out of options as regards the balance of payments and the general macroeconomic effects of the economy. The overall level of taxation has now become skewed.
This has not prevented the dyed-in-the-wool monetarists working at No. 10 Downing street behind the Prime Minister from crawling out of the woodwork and attacking the growth path which the economy was set upon two and a half years ago. The economy took a sharp upturn two and a half years ago and it had nothing to do with lower taxes; it had to do with low exchange rates, low energy costs, holding back energy price increases—which
have been made since the election—and taking the attitude


that at least until the general election the economy would be pushed on to a growth path by means of the greater competitiveness provided by lower exchange rates.
Then the worry started to come from the Treasury, from the gurus behind the Prime Minister, and from Professor Brian Griffiths and others. They said, "We do not like this growthmanship. It will lead to a reversion to trade union militancy. We shall find out whether we really have demonstrated that all the so-called sacrifices of the period 1979–81 really work." With such worries, they have started to emerge and say, "Now the economy is over-heating: we must turn it down."
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The Chancellor has weakened his ability to resist the loonies from No. 10 Downing street, and the think tanks that advise the Prime Minister have caused her to come out into the open and split Government economic policy wide open in the past two to three weeks. If the Chancellor had been less skewed in his attitude towards high rate tax cuts, he would still have had a few options open to him. He would still have been able to demonstrate to the financial community in London and elsewhere that we did not want the wall of money that has hit the country and sent the exchange rate soaring since the Budget.
That wall of money worries Opposition Members. It is a direct consequence of the low tax rates that were introduced in the Budget. They have severely weakened the Chancellor of the Exchequer's position and his ability to resist the monetarist maniacs who, once again, have attempted——

Mr. Carrington: It is widely assumed that foreign investment in this country comes from high interest rates and not from low tax rates. I do not think that there is a causal relationship between high interest rates and foreign investment, but I have not heard anybody expound the theory that low personal tax rates encourage foreign investment.

Mr. Morgan: I am grateful to the hon. Gentleman for making that point. He is perfectly right. There is no direct interrelationship between low tax rates and the wall of money. The wall of money has hit this country and has sent the exchange rate soaring because of the indirect effects of low tax rates. Low tax rates caused concern in the City because they were not tight enough. That meant that the Chancellor has been unable to play the low interest rate card sufficiently strongly to keep away the wall of money.
I assume that the Chancellor agrees that we do not want to see exchange rates rise to the level that they have reached. I assume that he is with me in saying that, if we want to keep the economy on a growth path, we need to keep exchange rates at a reasonable competitive level with the deutschmark. I assume that he agrees that we want to see energy costs kept at a reasonable level. We do not want electricity prices to be increased by 9 per cent. with the 4·5 per cent. that the electricity industry wanted. We do not want to see gas prices going up as they have. We want to see modest utility costs that are comparable with those of competitor industries. We want to see interest rates at a level comparable with those in our main competitor countries. Low tax rates have meant that the Chancellor cannot play that interest rate card at the moment. He has modestly reduced interest rates, but he has been unable to keep away the wall of money.
What is more, we now have two simultaneous economic policies—one run by the Prime Minister, and one run by the Chancellor of the Exchequer. That is extremely damaging for British industry. I do not know where she got the idea, but the Prime Minister has heard that it is good to have two economic policies. I have heard that she may have got the idea from China. Perhaps it is the benefits of competition. The Chinese Government say that, when they take over Hong Kong, it will be proper to have one Government and two economic policies.
Is that what we shall have? Industry does not like that idea. It regards it as a complete abortion to have lack of clarity about the main purpose of the Government's exchange rate and interest rate policy. Is it to keep industry producing the goods? If it is not, we shall be in serious balance of payments trouble by the end of the year. It may be intended to cane workers who are again demonstrating early signs of militancy.
The London financial community thinks that it is extremely worrying. If hon. Members read their stockbrokers' circulars, as I am sure they do, they will have seen that there is concern that trade union militancy is rising at twice the level of unemployment of 10 or 15 years ago. So much for the great Thatcher revolution, as it is known. So much for the great supply revolution. The Phillips curve is now double the employment level of 10 years ago. Is that a great achievement? That is what the stockbroker circulars are saying.
Having sold the pass by skewing the economy in the direction of high priced imports by massive cuts in the higher rates of taxation, the Chancellor is in real difficulties. That must be worrying to anyone who has at heart the long-term interest of industry. The Prime Minister said that one cannot buck the market. The Chancellor thinks that by a policy of managed currency floating and a form of deutschmark shadowing, it is possible at least to assuage the market in order to obtain a relationship inwhich British industry can work. Industry will, therefore, know that if the currency rises it will not rise by more than the deutschmark.
All that has gone out of the window because the Chancellor found himself caught in the religious fetish of low personal income tax rates. He cut them to a rate that is too low to allow him freedom of movement in cutting interest rates, which was what was needed in order to correct the balance of payment problems that are looming on the skyline as we move towards a probable figure of £7 billion to £8 billion for our balance of trade deficit. That is the projection in the Red Book for the current financial year.
There is sectoral overheating in the economy. It has not yet emerged in retail prices index inflation, because it is mostly in the form of asset price inflation. We have seen it occurring in certain sectors of the economy, because the economy has become skewed towards the financial community in the south-east of England and the activities of the building industry.
Inflation in the building industry is moving rapidly upwards. I had an example in my constituency recently. We have been encouraged to become involved in charitable projects and recently I was involved in fund raising for a building project. The quantity surveyor's estimate for the project was £150,000. There was no delay between the quantity surveyor's estimate and the building tenders, but the lowest building tender was £225,000. That


is 50 per cent. inflation. That kind of asset price inflation is caused by this skewing of the economy, which in turn is caused by reducing too much the top rate taxes.
We emphasise—I hope that there would be some support for this on the Government Back Benches—the long-term interest of rebuilding productive capacity in this country to take the place of North sea oil. Anything which merely causes the import of expensive luxury goods cannot be good for this country. We are already in a severe balance of payments crisis. We are consuming far more than we produce. That cannot be healthy. Our priority must be to invest in manufacturing industry and in research and development. We must lay emphasis on industrial training. We are training far fewer skilled workers than our main competitor countries, such as Italy, France and Germany.
If anyone were to ask British industry what it regards as the most important priority, not just for this year's Budget, but for the next two or three Budgets, it would say that there should be a clear policy from the Government as to where they are leading this country, as we move out of the North sea era and back to normality. When there is no windfall from the North sea, we will have to earn our living. As that problem becomes greater for us, we must revert to a policy whereby the taxation system, the interest rate system and the exhange rate policy of the Government are unified in order to make this country more productive, with its consumption and production in balance.
We appeal to the Chancellor and the Prime Minister to come together to resolve their apparently irreconcilable position on the exchange rate and on managed floating against free rising currencies. That penalises workers, who arc beginning to show greater balance between supply and demand for labour, which is having an impact on trade unions and wage bargaining. If Molotov and Ribbentrop could sign a pact, surely the Prime Minister and the Chancellor can do the same.
The Chancellor should not feel beleaguered. He should not be subject to finger-wagging in the Conservative Lobby or have to tell the world through magazines that his favourtie Shakespearian play is "The Taming of the Shrew." This policy will not give industry confidence to invest for the future to produce the goods that this country wants. It will not reduce unemployment to a level at which the Government will be able to say that social security payments can be reduced because unemployment has decreased and the country is productive again.

Mr. John Townend: The debate is drawing to a close, so I shall deal specifically with clauses 22 and 23.
I support these clauses, first, on the grounds of principle, and, secondly, on economic grounds. Penal levies of personal taxation, as practised by the last Labour Government, are immoral. To take 98p in the pound from any recipient is equivalent to confiscation. To take 83p in the pound from the salaries of executives, entrepreneurs and sportsmen is a disincentive. It cannot be justified on economic grounds. The only basis for it is that of envy and prosecuting the so-called class war.
What was the effect of those penal rates of taxation? A growing number of people did not pay those rates and under-declared their income. We saw the growth of the black economy. The Labour Government turned an honest country into one of tax fiddlers. Those who were

not dishonest avoided the higher rates of taxation by legal means, such as by employing armies of lawyers and accountants, who converted income into capital. No hon. Member has mentioned the fact that this Government have increased the capital gains tax rate for higher tax earners from 30 to 40 per cent., thus doing away with the artificial methods of paying tax.
The penal rates of tax resulted in a growth in perks. It was ridiculous that successful export sales managers were given, not an increase in salary, but a better car. If that was not a sufficient incentive, they simply left the country and became tax exiles. What greater condemnation can there be of the Labour Government than that they drove out some of the country's best brains, top doctors, sportsmen, business men, bankers, dancers, and pop stars? At the end of the day, those high rates of tax reduced the amount of tax that was paid.
In 1979 the in-coming Conservative Government couragously sliced the top rate of tax to 60 per cent. What has been the result? More revenue has been raised by taxes and there has been a resurgence in enterprise. My right hon. Friend the Chancellor of the Exchequer, with even greater courage in his first Budget after the election, reduced the top level of tax to 40 per cent. We now have an enterprise culture for the first time in 50 years.
The wealthy, the talented and the tax exiles will start to drift back. A tremendous boost is being given to the United Kingdom. It is becoming a place where international companies are establishing their headquarters. The reputation of the City as a financial centre will be reinforced. Indeed, it is already the financial centre of Europe.
There has been a reduction of 8p in the basic rate since the Government took office, and we are committed to reducing it further. I am amazed when Opposition Members oppose reductions in the basic rate. They talk about the high level of national insurance. Under the last Labour Government the basic rate was 35 per cent., plus 9 per cent. national insurance, making a total of 44p in the pound. Is it what the man on average earnings should be paying as a marginal rate?
Reducing taxation is popular and it signifies the difference in principle between our party and the Labour party. We believe that people should be allowed to keep money and spend it as they wish, whereas Opposition Members believe in taking more and more of an individual's income and spending it as they think best. To the Labour party, the man in Whitehall knows best. To us, the individual knows best.

Mr. John Smith: The contribution of the hon. Member for Bridlington (Mr. Townend) was useful because it illustrated to the Committee the psychology that pervades the Conservative Benches. To hear the hon. Gentleman speak, one would think that a high rate of personal income tax, such as existed under the previous Labour Government and, indeed, under previous Conservative Governments, constituted a positive obligation to act illegally and that people were entitled to avoid the law, to cheat, and to be dishonest because of high rates of taxation—[Interruption.] That was the whole burden of the hon. Gentleman's speech. He said that under high rates of tax——

Mr. John Townend: Will the right hon. and learned Gentleman give way?

Mr. Smith: I am not giving way until I have finished the indictment that I am fashioning for the hon. Gentleman. He argued that if we had high rates of tax, people broke the law. If that is so, we should prosecute those who break the law. Let me remind the hon. Gentleman that tax evasion has increased seven times since the Government came to office. The coincidence that he suggested does not exist, and, if there were such a coincidence, we should be doing something about it.
The hon. Gentleman argued that reductions in the top rates of income tax were necessarily a good thing for the country. That assertion has been at the heart of the debate. It has been convenient for us to consider clauses 22 and 23 together, although we shall have separate votes on them. Most of the debate has centred on the justification that Conservative Members have offered for the steep reductions in the higher rates of income tax. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) put it succinctly in his admirable contribution when he said that this Budget has effectively marked the end of progressive taxation in this country.
We now have only two rates of personal income tax—25 per cent. and 40 per cent. Historically—for most of the long period since the introduction of an income tax system, and certainly this centuryl—this country has had a progressive principle embedded in its income tax system. Most countries—particularly the countries similar to ours—in the European Community still have the progressive principle embedded in their taxation system.
The progressive principle has been abandoned in this Budget on grounds of simplicity. It is not good enough to say that we should have only two rates because that is simpler. The question is whether it is fair to have only two rates. Is it fair that a person on a very modest income should have a marginal rate of tax of 34 per cent., when income tax and national insurance are taken together, while a person of unlimited income—an income of £2 million to £3 million a year—pays only 40 per cent.? That leaves a difference of only 6 per cent. between the two. We have almost eliminated the notion of progressive taxation.
Clearly, Conservative Members have not comprehended the progressive principle of taxation. It is a simple, equitable idea that if one has more resources one should pay proportionately more to the cost of running the community than those with rather meagre resources. Of course, the person who earns a larger salary will pay a larger total, even if he pays at the same rate, but that is not the progressive principle. The progressive principle is that the more one has and the broader one's back, as my right hon. Friend the Member for Ashton-under-Lyne put it, the more of the burden one should he capable of carrying and the more of the burden one should be willing to carry.
One may have been blessed with good fortune which has given one brains, talent, energy, good luck or inherited wealth. Privilege, as well as ability, can contribute to one's income. When one has that income, one should not want to get rid of one's obligations as the rich in this country almost seem to want to do; one should shoulder that obligation as part of one's citizenship and be proud of it. Fortunately, I think that is still the view of many people in this country. I detected a note of embarrassment, almost of shame, in some well-off people when they were told the results of the Budget for them.
Of course, the notion that somehow we can justify all this unfairness on the ground of its alleged incentive effect is the biggest and most bogus argument in the whole debate. Conservative Members have been striving to find evidence for the assertion. The hon. Member for Beaconsfield (Mr. Smith), who is not in the Chamber now, did not bother with evidence; he asserted that it was just common sense. The hon. Gentleman's connection with common sense is usually coincidental so I shall not take what he says as reliable authority. One could assert equally well that it is a good argument for having high taxation because it would he an incentive to earn more to pay the tax. One proposition is as much common sense as the other.
One would need to look for empirical evidence to support the proposition that a huge incentive effect was created. We have heard about Professor Brown's study. The Chief Secretary to the Treasury knows perfectly well that it was commissioned by the Treasury. It cost £600,000 to carry out the study, yet the Chief Secretary tells us today that he has not even read this study, which is highly relevant to the major change proposed in the Budget. The Chief Secretary says that he has not even bothered to read it. He should now and again tear himself away from Woman's Own, which seems to be his favourite reading, and occasionally cast his eye over a Treasury paper. It would be more fitting to the responsibilities that he has to discharge to the Government and to Parliament.
What is said is that it does not really matter because my right hon. Friend the Member for Leeds, East (Mr. Healey) commissioned the study. My hon. Friend the Member for Motherwell, North (Dr. Reid) is not so naive as some hon. Members. He does not necessarily believe what he is told by Ministers. He telephoned Professor Brown this afternoon to find out whether that was the case. Professor Brown confirmed that he was originally commissioned by the Treasury, under the Labour Government, but that his study did not begin until September 1979, some months after the Conservatives took office. Not only that, he was asked to do it for three years, and the period of study was extended twice. Therefore, the notion that this study was left lying for the Conservative Government by a previous Labour Administration, an impression that they were keen to create, is proved totally false by the facts.
The reason why the Conservatives are so embarrassed about Professor Brown's study is that it blows up the whole theory. It shows that many people cannot alter the amount and pace of their work, or the number of hours, and they cannot be much affected in an incentive direction. Now all that has been swept aside.
Another study was mentioned. I think that my hon. Friend the Member for Dunfermline, East (Mr. Brown) has dealt effectively enough with the mysterious Professor Lindsey, who is the favoured supporter of the Financial Secretary to the Treasury. No doubt he will tell us in more detail of the clever studies on which we can rely.
Let us not fool ourselves with the notion that the Conservative Government believe all this nonsense about incentives. They do not. But they must say something to the public and to Parliament when they make these huge and unfair changes in taxation. Sometimes they tell us that we must target things cleverly, and that a lot of precise targeting has gone into social security benefits and changes in housing benefit. I do not notice very much targeting between the productive and unproductive rich. It does not


matter whether one is a highly paid industrialist or lying on one's backside in San Moritz, or Monte Carlo, or sunning oneself in the Caribbean. It makes no difference because there will be exactly the same amount of loot from the Budget. There is no such thing as targeting when it comes to spreading out benefits to the rich. But we have to target carefully every penny, every 5p and every pound when it goes to the needy, the poor and the disabled in this country.
What of the argument about inherited wealth, which is another feature of the Budget? We are not discussing this tonight, Sir Paul, but in passing I shall point out that the Government have reduced the rate of inheritance tax to 40 per cent. What kind of incentive is that? The only one that I can work out is an incentive to get rid of rich relatives earlier than one would otherwise wish. Indeed, it is an inventive to kill off relatives. That is the only sense that I can make of it. Surely a capital taxation has the opposite effect—it distinguishes the incentives. If we want to create incentive in the community, we should have heavier capital and inheritance taxes

Mr. Hind: Does the right hon. and learned Gentleman agree that one of the major reasons for the alteration in inheritance tax was to give the opportunity to thousands of owners of small businesses, which have been built up and helped to attack our unemployment problems, to pass on their businesses and keep them within the family? The purpose of the alteration was to help the new entrepreneurs who have created the wealth of this country and whom the right hon. and learned Gentleman denigrates

r. Smith: The hon. Gentleman is typical of the Conservative party. Whenever we deal with inheritance taxation the small business man is always in mind. He knows perfectly well that the greatest benefit from inheritance taxation—[Interruption.] The hon. Gentleman should listen to my answer. The greatest beneficiaries of inheritance tax are the large conglomerations of wealth that pass on relentlessly from one generation to another. That extinguishes every form of incentive in the people who receive those large amounts of money. We are driven to the conclusion that that tax has nothing to do with incentives, in either income or wealth; it is a deliberately unfair distribution.
My hon. Friend the Member for Dunfermline, East exposed that unfairness in a way that I hope the rest of the country will note with interest. In a parliamentary answer given to him by the Financial Secretary, who will reply to the debate, he was told that 1·1 per cent. of the taxpayers of a household will get more than 31 per cent. of the benefits of the Budget. Only 1 per cent. will get 30 per cent. of the benefits. Who could possibly justify that on any ground of fairness?
Certainly it cannot be justified when we are faced with social security cuts of a nature never seen before, when people are coming to see my hon. Friends and Conservative Members with panic in their voices. They describe the circumstances that they face with savage cuts in their income and no way in which they can do anything to replace that income. I hope that we shall not say to the

retired, the disabled and the widowed that they should go out and work harder or some such rubbish when faced with a severe cut in their incomes.

Mr. Major: What about the basic rate?

Mr. Smith: I shall tell the right hon. Gentleman about the basic rate.

Hon. Members: Tell us about it now.

Mr. James Pawsey: rose——

Mr. Smith: No, I shall not give way.
We now have the poll tax coming at the end of it all—[Interruption.]

Mr. Neil Hamilton: That has nothing to do with this debate.

Mr. Smith: It has a great deal to do with this Budget. It is the fundamental demonstration that the concept of fairness in taxation has been totally abandoned by the Conservative party.
We do not need two rates of tax—a so-called basic rate and a higher rate. We want, in common with all other countries that have sense and intelligence regarding taxation, a range of taxation starting lower than the present basic rate and finishing higher than the present higher level.
In conclusion, I wish to quote an article from the Financial Times of 19 March 1988. It was written by Mr. Michael Prowse—[Interruption.] Hon. Gentlemen should listen to this because it is relevant to the debate. Mr. Prowse states:
There is no long-run correlation between tax rates and economic growth. Japan has easily outperformed other industrial economies in recent decades and yet it has a highly progressive income tax.

Dame Elaine Kellett-Bowman: What about the Labour party?

Mr. Smith: All the squeaks in the world will not stop me from reading this particular document. The article continues:
The top rate in 1979 was 93 per cent., little short of Britain, and the reduction since then, to 78 per cent., has been modest.
There is a top rate of tax of 78 per cent. in Japan, yet we are told that lower rates of tax are somehow an incentive to economic growth and efficiency.
We shall vote against these tax proposals tonight—both the standard rate and the higher rate changes—because we believe that the money should have been spent on the Health Service, on ensuring a decent social security system and decent public services in this country. Those were the needs that Britain required. Instead, this foolish and immoral Government have chosen to give a vast amount of money to 1 per cent. of the population. The Government do not represent the people of Britain in doing that. The Opposition will speak for them by voting against these proposals.

Mr. Norman Lamont: I agree with my hon. Friend the Member for Bridlington (Mr. Townend) that this debate has sharply illustrated the considerable divide in the approach of the two parties. The right hon. and learned Member for Monklands, East (Mr. Smith) has shown again that the Labour party is itching to put up tax rates


—and not only the higher rates. He devoted a great deal of time to telling us how the higher rates provided no incentive, but he gave no justification for his obvious desire and eagerness to put up the basic rate for 23 million people.
Hon. Members have missed the fact that a large part of the measures in the Budget have gone to help not only the super-rich, with whom Opposition Members seem obsessed, but the man on average earnings, who will gain £5 a week from them. For 23 million people the marginal rate of tax is the basic rate, against which the Opposition will vote. I wish they would make their position clear. During the election they told us that they were opposed to the cut from 29p to 27p in the pound. Now they are against the cut from 27p to 25p. What would they put the rate up to—27p or 29p?
The right hon. and learned Member for Monklands, East complained that time and again my right hon. Friend the Chief Secretary had quoted from Woman's Own. I do not want to quote from Woman's Own, but I had the pleasure of hearing the right hon. and learned Gentleman early in the morning on the "Today" programme on 30 September last year, when he said:
We want to make sure that people under a Labour Government will feel relaxed and content and happy about being prosperous.
We, too, want them to be happy and content, and we also want to know what the basic rate of tax will rise to if there is a Labour Government.
These tax cuts need to be examined against the background of all the Budgets that went before this one, as my hon. Friend the Member for Birmingham, Northfield (Mr. King) said. The Budget gives substantial tax cuts to people at the higher end of the scale—no one denies that—but that needs to be judged against what has happened in all the other Budgets.
This is the sixth Budget in succession in which we have reduced income tax, which is far more than could ever be said of a Labour Government. Many of the benefits of these cuts in taxation have gone to the lower paid. Over successive Budgets, those with incomes below £5,000 have had their tax cut by about 38 per cent. Those with incomes between £5,000 and £10,000 have had their income tax reduced by about 28 per cent. Wherever the right hon. and learned Gentleman stands on the questions that he dodged and refused to answer, it is clear from the Labour party's expenditure plans and record that if it ever returned to office there would be a crippling increase in taxation, not only for the higher paid, but for the average and lower paid, who paid for the excesses of the Labour party's overspending before.

Mr. Bruce Grocott: The right hon. Gentleman is ducking the issue of incentives. Will he confirm that it is official Government thinking that people such as Sir Ralph Halpern, whose pre-Budget take-home pay was in excess of £500,000 a year, were not receiving enough incentives to work hard? Will he give us his estimate of whether Sir Ralph will break sweat now that his take-home pay has increased by £250,000 a year?

Mr. Lamont: If the hon. Gentleman will allow me, I shall deal with the question of management incentives. An incentive is needed for top management. I shall go into that in detail, but I want, first, to answer the point raised by the right hon. and learned Member for Monklands, East on the various studies by Professor Brown and others.

The hon. Member for Dunfermline, East (Mr. Brown) misrepresented a little, although not deliberately, my position on the studies by Professors Brown and Lindsey. I made it crystal clear that the Government do not, and never did, think that we need to wait until some academic study has been completed before we decide to cut taxes.
We made no commitment at the election that we would wait until Professor Brown had completed his study before we cut taxation. As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, there are plenty of ways—and I shall demonstrate them—in which one can show that there are benefits to the economy from cutting taxes. I see that the right hon. Gentleman is consulting Hansard. I shall just remind him of what I said:
The evidence is all around us. It is in the tax cuts that we made in 1979".—[Official Report, 26 April 1988; Vol. 132., c. 296.]
Those tax cuts have more than paid for themselves.
When the hon. Member for Dunfermline, East commented on the study by Professor Lindsey, he was riot quite up-to-date. He said that Professor Lindsey merely found that, in the United States, some cuts in higher taxes had resulted in income being declared that would riot otherwise have been declared. We have always made it clear that that is one of the effects of cutting higher rate taxes.
Opposition Members are shocked out of their wits about that, but it was not the only effect that Professor Lindsey had in mind. He went on to say that there would also be an effect from increased work effort. The hon. Gentleman may be interested to know that Professor Lindsey argues in his latest work that the combined impact of all those factors is to make it desirable to have a tax revenue maximising the rate of income tax at around 40 per cent. That may just be a coincidence.
It is a matter of judgment, but any tax rate of 50 per cent. or over will have a severe disincentive effect. It will give people every reason to want to shelter their income and will not be effective in encouraging management to come to this country. In a world in which all the top rates of tax are coming down, we were right to pitch our new rate of tax at the lower end, although there are many countries below us. A country such as ours, which needs to attract the best management talent from all over the world, should pitch tax rates at the lowest end.
The right hon. and learned Member for Monklands, East referred to Japan and said, "Well, of course, Japan has a progressive system of taxation which goes up to 65 per cent.," but he is out of date with Japan's new proposals. He does not know that the top rate of 60 per cent. starts at an income level of over £150,000.

Mr. D. N. Campbell-Savours: Why do the Government not do that?

Mr. Lamont: In Japan, on an income of £11,000, the rate is only 18 per cent., compared with a rate of 25 per cent. in this country. The hon. Gentleman says that we could do that, but if, instead of cutting the rates, we has increased the thresholds at which the higher rates become payable, we know that Opposition Members would have said exactly what they are saying now, that it is a Budget for the rich, and they would have opposed it just as much as they would have opposed the cuts in rates.
My hon. Friend the Member for Wells (Mr. Heathcoat-Amory) explained that we had reduced the rates of capital taxes as well as income tax and had


increased revenue considerably. That has also been the effect on the top rates of income tax. As I said in an earlier debate which bore a little similarity to this one, whether we take the top 1, 2, 3 or 5 per cent., or all the higher rate taxpayers together, we see that today they are contributing a higher proportion of income tax revenues than they were in 1978–89. This reflects the increased dynamism and profitability of the British economy.
The hon. Member for Clydebank and Milngavie (Mr. Worthington) said that people have decided to pay themselves more. These mysterious people must be jolly lucky to be able to pay themselves more. The hon. Gentleman also said that the differentials were widening. There is bound to be an effect from the ending of pay controls, and rightly so. They were immensely damaging to our economy and management. I believe that widening differentials are good, quite apart from the fact that they have meant that more tax is being declared. There is no doubt that under the system of pay controls that existed under the previous Labour Government there was a lot of tax evasion, a great deal of remuneration by way of benefits in kind and ways to get round the pay controls.
We have also seen an increase in the number of self-employed in the top 5 per cent. of tax payers. Opposition Members will probably say that they are simply remunerating themselves more, because the Opposition have very little sympathy for the self-employed. However, Conservative Members know that if the self-employed are earning more that is because their businesses are doing better and creating more, and it is right that they should be rewarded.
Opposition Members wanted a rationale for the higher rate reductions. Another damaging effect of high marginal rates is that they obscure differentials between one job and another. They make it more difficult for management to move from one company to another, or from overseas back to this country because that is not worth while in post-tax terms.
One of the good points—not just because of our tax rates, but because our economy has improved so much—is that we have seen some of the leading companies attracting chief executives from all around the world to work here because this is a good competitive economy.
As my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) said, tax cuts enable managers to build up capital. We need managers, not only to work for large companies, but to go out and found new businesses and work on their own.
One of the best things to happen in this country over the past few years has been the increase in the number of people leaving big business to start up new businesses. We have seen considerable growth in the venture capital industry, which last year raised £750 million for small businesses. This industry is second only to that in the United States, and it is bigger than any other in Europe.
Although we listened to Opposition Members, we learned nothing about what they propose to do about tax. The hon. Member for Dunfermline, East would not tell us what the Opposition plan for the basic rate of tax. We know that they intend to abolish the married man's allowance, thus making 11 million couples more than £7 a week worse off. They want to abolish the upper earnings

limit on national insurance contributions, so putting up the marginal rate for 2 million basic ratepayers by nine percentage points.
We do not know what the Opposition want to do with the higher rates. A report appeared in The Times, which the hon. Member for Dunfermline, East did not deny, that the Opposition would put the top rate up to 50 per cent. If that is so, their objection to our proposal is merely one of degree and their indignation is hypocritical and synthetic. If they intend to return to 60, 70, 83 or 98 per cent., they will damage the economy in exactly the same way as they did when they were in office. I urge my right hon. and hon. Friends to support the clause.

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Coroners Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Ryder.]

Finance (No. 2) Bill

Again considered in Committee.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 256, Noes 201.

Division No. 282]
[10.00 pm


AYES


Allason, Rupert
Evennett, David


Amess, David
Fallon, Michael


Arbuthnot, James
Farr, Sir John


Arnold, Jacques (Gravesham)
Favell, Tony


Arnold, Tom (Hazel Grove)
Field, Barry (Isle of Wight)


Baldry, Tony
Fookes, Miss Janet


Beaumont-Dark, Anthony
Forman, Nigel


Bendall, Vivian
Forsyth, Michael (Stirling)


Bennett, Nicholas (Pembroke)
Forth, Eric


Bevan, David Gilroy
Fowler, Rt Hon Norman


Biggs-Davison, Sir John
Fox, Sir Marcus


Body, Sir Richard
Freeman, Roger


Boscawen, Hon Robert
French, Douglas


Bottomley, Mrs Virginia
Fry, Peter


Bowden, Gerald (Dulwich)
Gardiner, George


Brandon-Bravo, Martin
Garel-Jones, Tristan


Brazier, Julian
Gill, Christopher


Brooke, Rt Hon Peter
Goodhart, Sir Philip


Bruce, Ian (Dorset South)
Goodlad, Alastair


Buchanan-Smith, Rt Hon Alick
Goodson-Wickes, Dr Charles


Buck, Sir Antony
Gorman, Mrs Teresa


Budgen, Nicholas
Gow, Ian


Butterfill, John
Gower, Sir Raymond


Carlisle, Kenneth (Lincoln)
Grant, Sir Anthony (CambsSW)


Carrington, Matthew
Greenway, Harry (Ealing N)


Chapman, Sydney
Greenway, John (Ryedale)


Chope, Christopher
Griffiths, Sir Eldon (Bury St E')


Clark, Hon Alan (Plym'th S'n)
Griffiths, Peter (Portsmouth N)


Clark, Dr Michael (Rochford)
Grist, Ian


Clarke, Rt Hon K. (Rushcliffe)
Ground, Patrick


Colvin, Michael
Hamilton, Hon Archie (Epsom)


Coombs, Anthony (Wyre F'rest)
Hamilton, Neil (Tatton)


Coombs, Simon (Swindon)
Hampson, Dr Keith


Cran, James
Hannam, John


Currie, Mrs Edwina
Hargreaves, A. (B'ham H'll Gr')


Curry, David
Hargreaves, Ken (Hyndburn)


Davies, Q. (Stamf'd &amp; Spald'g)
Harris, David


Davis, David (Boothferry)
Haselhurst, Alan


Devlin, Tim
Hawkins, Christopher


Dickens, Geoffrey
Hayes, Jerry


Dorrell, Stephen
Hayhoe, Rt Hon Sir Barney


Douglas-Hamilton, Lord James
Hayward, Robert


Dover, Den
Heathcoat-Amory, David


Durant, Tony
Heseltine, Rt Hon Michael


Dykes, Hugh
Hicks, Mrs Maureen (Wolv' NE)


Eggar. Tim
Hicks, Robert (Cornwall SE)


Emery, Sir Peter
Higgins, Rt Hon Terence L.






Hind, Kenneth
Peacock, Mrs Elizabeth


Hogg, Hon Douglas (Gr'th'm)
Porter, David (Waveney)


Holt, Richard
Portillo, Michael


Hordern, Sir Peter
Powell, William (Corby)


Howarth, Alan (Strat'd-on-A)
Price, Sir David


Howarth, G. (Cannock &amp; B'wd)
Raffan, Keith


Howell, Rt Hon David (G'dford)
Raison, Rt Hon Timothy


Hughes, Robert G. (Harrow W)
Redwood, John


Hunt, David (Wirral W)
Renton, Tim


Hunter, Andrew
Rhodes James, Robert


Hurd, Rt Hon Douglas
Riddick, Graham


Irving, Charles
Ridley, Rt Hon Nicholas


Jack, Michael
Ridsdale, Sir Julian


Jackson, Robert
Rifkind, Rt Hon Malcolm


Janman, Tim
Roberts, Wyn (Conwy)


Johnson Smith, Sir Geoffrey
Roe, Mrs Marion


Jones, Gwilym (Cardiff N)
Rossi, Sir Hugh


Jones, Robert B (Herts W)
Rost, Peter


Jopling, Rt Hon Michael
Rowe, Andrew


Kellett-Bowman, Dame Elaine
Rumbold, Mrs Angela


Key, Robert
Ryder, Richard


Kilfedder, James
Shaw, David (Dover)


King, Roger (B'ham N'thfield)
Shaw, Sir Giles (Pudsey)


Kirkhope, Timothy
Shaw, Sir Michael (Scarb')


Knapman, Roger
Shephard, Mrs G. (Norfolk SW)


Knight, Dame Jill (Edgbaston)
Shepherd, Colin (Hereford)


Knowles, Michael
Shersby, Michael


Knox, David
Sims, Roger


Lamont, Rt Hon Norman
Skeet, Sir Trevor


Lang, Ian
Smith, Tim (Beaconsfield)


Latham, Michael
Soames, Hon Nicholas


Lawrence, Ivan
Speller, Tony


Lawson, Rt Hon Nigel
Spicer, Michael (S Worcs)


Lester, Jim (Broxtowe)
Squire, Robin


Lilley, Peter
Stanbrook, Ivor


Lloyd, Sir Ian (Havant)
Steen, Anthony


Lloyd, Peter (Fareham)
Stern, Michael


Lyell, Sir Nicholas
Stevens, Lewis


McCrindle, Robert
Stewart, Allan (Eastwood)


MacGregor, Rt Hon John
Stewart, Andy (Sherwood)


Maclean, David
Sumberg, David


McNair-Wilson, M. (Newbury)
Summerson, Hugo


McNair-Wilson. P. (New Forest)
Taylor, Ian (Esher)


Major, Rt Hon John
Taylor, John M (Solihull)


Malins, Humfrey
Taylor, Teddy (S'end E)


Mans, Keith
Tebbit, Rt Hon Norman


Maples, John
Thatcher, Rt Hon Margaret


Marland, Paul
Thompson, D. (Calder Valley)


Marlow, Tony
Thompson, Patrick (Norwich N)


Marshall, John (Hendon S)
Thorne, Neil


Marshall, Michael (Arundel)
Thornton, Malcolm


Martin, David (Portsmouth S)
Thurnham, Peter


Maxwell-Hyslop, Robin
Townend, John (Bridlington)


Mayhew, Rt Hon Sir Patrick
Tracey, Richard


Meyer, Sir Anthony
Tredinnick, David


Miller, Hal
Trotter, Neville


Miscampbell, Norman
Twinn, Dr Ian


Mitchell, Andrew (Gedling)
Vaughan, Sir Gerard


Mitchell, David (Hants NW)
Waddington, Rt Hon David


Moate, Roger
Wakeham, Rt Hon John


Monro, Sir Hector
Waldegrave, Hon William


Montgomery, Sir Fergus
Walden, George


Morrison, Hon Sir Charles
Walker, Bill (T'Side North)


Moss, Malcolm
Waller, Gary


Moynihan, Hon Colin
Ward, John


Neale, Gerrard
Wardle, Charles (Bexhill)


Needham, Richard
Warren, Kenneth


Nelson, Anthony
Watts, John


Neubert, Michael
Wells, Bowen


Newton, Rt Hon Tony
Wheeler, John


Nicholls, Patrick
Whitney, Ray


Nicholson, David (Taunton)
Widdecombe, Ann


Nicholson, Emma (Devon West)
Wiggin, Jerry


Onslow, Rt Hon Cranley
Wilshire, David


Page, Richard
Winterton, Mrs Ann


Paice, James
Winterton, Nicholas


Parkinson, Rt Hon Cecil
Wolfson, Mark


Patnick, Irvine
Wood, Timothy


Patten, Chris (Bath)
Woodcock, Mike


Pawsey, James
Yeo, Tim





Young, Sir George (Acton)
Tellers for the Ayes:


Younger, Rt Hon George
Mr. Mark Lennox-Boyd and Mr. David Lightbown.




NOES


Abbott, Ms Diane
Golding, Mrs Llin


Adams, Allen (Paisley N)
Gordon, Mildred


Allen, Graham
Gould, Bryan


Anderson, Donald
Graham, Thomas


Archer, Rt Hon Peter
Grant, Bernie (Tottenham)


Armstrong, Hilary
Griffiths, Nigel (Edinburgh S)


Ashley, Rt Hon Jack
Griffiths, Win (Bridgend)


Ashton, Joe
Grocott, Bruce


Banks, Tony (Newham NW)
Harman, Ms Harriet


Barnes, Harry (Derbyshire NE)
Hattersley, Rt Hon Roy


Barron, Kevin
Healey, Rt Hon Denis


Battle, John
Heffer, Eric S.


Beckett, Margaret
Henderson, Doug


Benn, Rt Hon Tony
Hinchliffe, David


Bennett, A. F. (D'nt'n &amp; R'dish)
Hogg, N. (Cnauld &amp; Kilsyth)


Bermingham, Gerald
Holland, Stuart


Bidwell, Sydney
Home Robertson, John


Blair, Tony
Hood, Jimmy


Boateng, Paul
Howell, Rt Hon D. (S'heath)


Boyes, Roland
Howells, Geraint


Bray, Dr Jeremy
Hoyle, Doug


Brown, Gordon (D'mline E)
Hughes, John (Coventry NE)


Brown, Nicholas (Newcastle E)
Hughes, Robert (Aberdeen N)


Bruce, Malcolm (Gordon)
Hughes, Roy (Newport E)


Buchan, Norman
Hughes, Sean (Knowsley S)


Buckley, George J.
Illsley, Eric


Caborn, Richard
Ingram, Adam


Callaghan, Jim
Janner, Greville


Campbell, Menzies (Fife NE)
John, Brynmor


Campbell, Ron (Blyth Valley)
Jones, Barry (Alyn &amp; Deeside)


Campbell-Savours, D. N.
Jones, Ieuan (Ynys Môn)


Canavan, Dennis
Jones, Martyn (Clwyd S W)


Carlile, Alex (Mont'g)
Kaufman, Rt Hon Gerald


Clark, Dr David (S Shields)
Kennedy, Charles


Clarke, Tom (Monklands W)
Kinnock, Rt Hon Neil


Clay, Bob
Lamond, James


Clelland, David
Leadbitter, Ted


Clwyd, Mrs Ann
Leighton, Ron


Cohen, Harry
Lestor, Joan (Eccles)


Cook, Robin (Livingston)
Lloyd, Tony (Stretford)


Cousins, Jim
Lofthouse, Geoffrey


Cryer, Bob
Loyden, Eddie


Cummings, John
McAllion, John


Cunliffe, Lawrence
McAvoy, Thomas


Cunningham, Dr John
McCartney, Ian


Dalyell, Tam
Macdonald, Calum A.


Darling, Alistair
McFall, John


Davies, Rt Hon Denzil (Llanelli)
McKay, Allen (Barnsley West)


Davies, Ron (Caerphilly)
McKelvey, William


Davis, Terry (B'ham Hodge H'l)
McLeish, Henry


Dewar, Donald
McNamara, Kevin


Dixon, Don
McTaggart, Bob


Dobson, Frank
McWilliam, John


Doran, Frank
Madden, Max


Douglas, Dick
Mahon, Mrs Alice


Duffy, A. E. P.
Marek, Dr John


Dunwoody, Hon Mrs Gwyneth
Marshall, David (Shettleston)


Eadie, Alexander
Marshall, Jim (Leicester S)


Eastham, Ken
Martin, Michael J. (Springburn)


Evans, John (St Helens N)
Martlew, Eric


Ewing, Mrs Margaret (Moray)
Maxton, John


Fatchett, Derek
Meacher, Michael


Fearn, Ronald
Meale, Alan


Field, Frank (Birkenhead)
Michael, Alun


Fisher, Mark
Michie, Bill (Sheffield Heeley)


Flannery, Martin
Michie, Mrs Ray (Arg'l &amp; Bute)


Flynn, Paul
Millan, Rt Hon Bruce


Foot, Rt Hon Michael
Mitchell, Austin (G't Grimsby)


Foster, Derek
Moonie, Dr Lewis


Foulkes, George
Morgan, Rhodri


Fraser, John
Morley, Elliott


Fyfe, Maria
Morris, Rt Hon A. (W'shawe)


Galloway, George
Morris, Rt Hon J. (Aberavon)


Garrett, John (Norwich South)
Mowlam, Marjorie


George, Bruce
Mullin, Chris






Murphy, Paul
Smith, Rt Hon J. (Monk'ds E)


Nellist, Dave
Snape, Peter


Oakes, Rt Hon Gordon
Soley, Clive


O'Brien, William
Spearing, Nigel


Patchett, Terry
Steel, Rt Hon David


Pendry, Tom
Straw, Jack


Pike, Peter L.
Taylor, Mrs Ann (Dewsbury)


Powell, Ray (Ogmore)
Turner, Dennis


Prescott, John
Wall, Pat


Primarolo, Dawn
Wallace, James


Quin, Ms Joyce
Walley, Joan


Randall, Stuart
Wardell, Gareth (Gower)


Reid, Dr John
Wareing, Robert N.


Richardson, Jo
Welsh, Michael (Doncaster N)


Robertson, George
Wigley, Dafydd


Robinson, Geoffrey
Williams, Rt Hon Alan


Rogers, Allan
Williams, Alan W. (Carm'then)


Rooker, Jeff
Wilson, Brian


Ross, Ernie (Dundee W)
Winnick, David


Rowlands, Ted
Wise, Mrs Audrey


Sedgemore, Brian
Worthington, Tony


Sheerman, Barry
Wray, Jimmy


Sheldon, Rt Hon Robert
Young, David (Bolton SE)


Shore, Rt Hon Peter



Short, Clare
Tellers for the Noes:


Skinner, Dennis
Mr. Frank Haynes and Mr. Frank Cook.


Smith, Andrew (Oxford E)



Smith, C. (Isl'ton &amp; F'bury)

Question accordingly agreed to.

Clause ordered to stand part of the Bill.

Clause 23

HIGHER AND ADDITIONAL RATES OF INCOME TAX

Question put, That the clause stand part of the Bill:-

The Committee divided: Ayes 250, Noes 199.

Division No. 283]
[10.15 pm


AYES


Allason, Rupert
Dorrell, Stephen


Amess, David
Douglas-Hamilton, Lord James


Arbuthnot, James
Dover, Den


Arnold, Jacques (Gravesham)
Durant, Tony


Arnold, Tom (Hazel Grove)
Dykes, Hugh


Baldry, Tony
Eggar, Tim


Beaumont-Dark, Anthony
Emery, Sir Peter


Bendall, Vivian
Evennett, David


Bennett, Nicholas (Pembroke)
Fallon, Michael


Bevan, David Gilroy
Farr, Sir John


Body, Sir Richard
Favell, Tony


Boscawen, Hon Robert
Field, Barry (Isle of Wight)


Bottomley, Mrs Virginia
Fookes, Miss Janet


Bowden, Gerald (Dulwich)
Forman, Nigel


Brandon-Bravo, Martin
Forsyth, Michael (Stirling)


Brazier, Julian
Forth, Eric


Brooke, Rt Hon Peter
Fowler, Rt Hon Norman


Buchanan-Smith, Rt Hon Alick
Fox, Sir Marcus


Buck, Sir Antony
Freeman, Roger


Budgen, Nicholas
French, Douglas


Butterfill, John
Fry, Peter


Carlisle, Kenneth (Lincoln)
Gardiner, George


Carrington, Matthew
Garel-Jones, Tristan


Chapman, Sydney
Gill, Christopher


Chope, Christopher
Goodhart, Sir Philip


Clark, Hon Alan (Plym'th S'n)
Goodlad, Alastair


Clark, Dr Michael (Rochford)
Goodson-Wickes, Dr Charles


Clarke, Rt Hon K. (Rushcliffe)
Gorman, Mrs Teresa


Colvin, Michael
Gow, Ian


Coombs, Anthony (Wyre F'rest)
Gower, Sir Raymond


Coombs, Simon (Swindon)
Grant, Sir Anthony (CambsSW)


Cran, James
Greenway, Harry (Ealing N)


Currie, Mrs Edwina
Greenway, John (Ryedale)


Curry, David
Griffiths, Sir Eldon (Bury St E')


Davies, Q. (Stamf'd &amp; Spald'g)
Griffiths, Peter (Portsmouth N)


Davis, David (Boothferry)
Grist, Ian


Devlin, Tim
Ground, Patrick


Dickens, Geoffrey
Hamilton, Hon Archie (Epsom)





Hamilton, Neil (Tatton)
Nelson, Anthony


Hampson, Dr Keith
Neubert, Michael


Hannam, John
Newton, Rt Hon Tony


Hargreaves, A. (B'ham H'll Gr')
Nicholls, Patrick


Hargreaves, Ken (Hyndburn)
Nicholson, David (Taunton)


Harris, David
Nicholson, Emma (Devon West)


Haselhurst, Alan
Onslow, Rt Hon Cranley


Hawkins, Christopher
Page, Richard


Hayes, Jerry
Paice, James


Hayhoe, Rt Hon Sir Barney
Parkinson, Rt Hon Cecil


Hayward, Robert
Patnick, Irvine


Heathcoat-Amory, David
Patten, Chris (Bath)


Heseltine, Rt Hon Michael
Pawsey, James


Hicks, Mrs Maureen (Wolv' NE)
Peacock, Mrs Elizabeth


Hicks, Robert (Cornwall SE)
Porter, David (Waveney)


Higgins, Rt Hon Terence L.
Portillo, Michael


Hind, Kenneth
Powell, William (Corby)


Hogg, Hon Douglas (Gr'th'm)
Price, Sir David


Holt, Richard
Raffan, Keith


Hordern, Sir Peter
Raison, Rt Hon Timothy


Howarth, Alan (Strat'd-on-A)
Redwood, John


Howarth, G. (Cannock &amp; B'wd)
Renton, Tim


Howell, Rt Hon David (G'dford)
Rhodes James, Robert


Hughes, Robert G. (Harrow W)
Riddick, Graham


Hunt, David (Wirral W)
Ridley, Rt Hon Nicholas


Hunter, Andrew
Ridsdale, Sir Julian


Irving, Charles
Rifkind, Rt Hon Malcolm


Jack, Michael
Roberts, Wyn (Conwy)


Jackson, Robert
Roe, Mrs Marion


Janman, Tim
Rossi, Sir Hugh


Johnson Smith, Sir Geoffrey
Rost, Peter


Jones, Gwilym (Cardiff N)
Rowe, Andrew


Jones, Robert B (Herts W)
Rumbold, Mrs Angela


Jopling, Rt Hon Michael
Ryder, Richard


Kellett-Bowman, Dame Elaine
Shaw, David (Dover)


Key, Robert
Shaw, Sir Giles (Pudsey)


Kilfedder, James
Shaw, Sir Michael (Scarb')


King, Roger (B'ham N'thfield)
Shephard, Mrs G. (Norfolk SW)


Kirkhope, Timothy
Shepherd, Colin (Hereford)


Knapman, Roger
Shersby, Michael


Knight, Dame Jill (Edgbaston)
Sims, Roger


Knowles, Michael
Skeet, Sir Trevor


Knox, David
Smith, Tim (Beaconsfield)


Lamont, Rt Hon Norman
Soames, Hon Nicholas


Lang, Ian
Speller, Tony


Latham, Michael
Spicer, Michael (S Worcs)


Lawrence, Ivan
Squire, Robin


Lawson, Rt Hon Nigel
Stanbrook, Ivor


Lester, Jim (Broxtowe)
Steen, Anthony


Lilley, Peter
Stern, Michael


Lloyd, Peter (Fareham)
Stevens, Lewis


Lyell, Sir Nicholas
Stewart, Allan (Eastwood)


McCrindle, Robert
Stewart, Andy (Sherwood)


MacGregor, Rt Hon John
Sumberg, David


Maclean, David
Summerson, Hugo


McNair-Wilson, M. (Newbury)
Taylor, Ian (Esher)


McNair-Wilson, P. (New Forest)
Taylor, John M (Solihull)


Major, Rt Hon John
Tebbit, Rt Hon Norman


Malins, Humfrey
Thatcher, Rt Hon Margaret


Mans, Keith
Thompson, D. (Calder Valley)


Maples, John
Thompson, Patrick (Norwich N)


Marlow, Tony
Thorne, Neil


Marshall, John (Hendon S)
Thornton, Malcolm


Marshall, Michael (Arundel)
Thurnham, Peter


Martin, David (Portsmouth S)
Townend, John (Bridlington)


Maxwell-Hyslop, Robin
Tracey, Richard


Mayhew, Rt Hon Sir Patrick
Tredinnick, David


Meyer, Sir Anthony
Trotter, Neville


Miller, Hal
Twinn, Dr Ian


Miscampbell, Norman
Vaughan, Sir Gerard


Mitchell, Andrew (Gedling)
Waddington, Rt Hon David


Mitchell, David (Hants NW)
Wakeham, Rt Hon John


Moate, Roger
Waldegrave, Hon William


Monro, Sir Hector
Walden, George


Montgomery, Sir Fergus
Walker, Bill (T'side North)


Morrison, Hon Sir Charles
Waller, Gary


Moss, Malcolm
Ward, John


Moynihan, Hon Colin
Wardle, Charles (Bexhill)


Neale, Gerrard
Warren, Kenneth


Needham, Richard
Watts, John






Wells, Bowen
Wood, Timothy


Wheeler, John
Woodcock, Mike


Whitney, Ray
Yeo, Tim


Widdecombe, Ann
Young, Sir George (Acton)


Wiggin, Jerry
Younger, Rt Hon George


Wilshire, David



Winterton, Mrs Ann
Tellers for the Ayes:


Winterton, Nicholas
Mr. Mark Lennox-Boyd and Mr. David Lightbown.


Wolfson, Mark





NOES


Abbott, Ms Diane
Dixon, Don


Adams, Allen (Paisley N)
Dobson, Frank


Allen, Graham
Doran, Frank


Anderson, Donald
Douglas, Dick


Archer, Rt Hon Peter
Duffy, A. E. P.


Armstrong, Hilary
Dunwoody, Hon Mrs Gwyneth


Ashley, Rt Hon Jack
Eadie, Alexander


Ashton, Joe
Eastham, Ken


Banks, Tony (Newham NW)
Evans, John (St Helens N)


Barnes, Harry (Derbyshire NE)
Ewing, Mrs Margaret (Moray)


Barron, Kevin
Fatchett, Derek


Battle, John
Fearn, Ronald


Beckett, Margaret
Field, Frank (Birkenhead)


Beith, A. J.
Fisher, Mark


Benn, Rt Hon Tony
Flannery, Martin


Bermingham, Gerald
Flynn, Paul


Bidwell, Sydney
Foot, Rt Hon Michael


Blair, Tony
Foster, Derek


Boateng, Paul
Foulkes, George


Boyes, Roland
Fraser, John


Bray, Dr Jeremy
Fyfe, Maria


Brown, Gordon (D'mline E)
Galloway, George


Brown, Nicholas (Newcastle E)
Garrett, John (Norwich South)


Bruce, Malcolm (Gordon)
George, Bruce


Buchan, Norman
Golding, Mrs Llin


Buckley, George J.
Gordon, Mildred


Caborn, Richard
Gould, Bryan


Callaghan, Jim
Graham, Thomas


Campbell, Menzies (Fife NE)
Grant, Bernie (Tottenham)


Campbell, Ron (Blyth Valley)
Griffiths, Nigel (Edinburgh S)


Campbell-Savours, D. N.
Griffiths, Win (Bridgend)


Canavan, Dennis
Grocott, Bruce


Carlile, Alex (Mont'g)
Harman, Ms Harriet


Clark, Dr David (S Shields)
Hattersley, Rt Hon Roy


Clarke, Tom (Monklands W)
Healey, Rt Hon Denis


Clay, Bob
Heffer, Eric S.


Clelland, David
Henderson, Doug


Clwyd, Mrs Ann
Hinchliffe, David


Cohen, Harry
Hogg, N. (C'nauld &amp; Kilsyth)


Cook, Robin (Livingston)
Holland, Stuart


Cousins, Jim
Home Robertson, John


Cryer, Bob
Hood, Jimmy


Cummings, John
Howell, Rt Hon D. (S'heath)


Cunliffe, Lawrence
Howells, Geraint


Cunningham, Dr John
Hoyle, Doug


Dalyell, Tam
Hughes, John (Coventry NE)


Darling, Alistair
Hughes, Robert (Aberdeen N)


Davies, Ron (Caerphilly)
Hughes, Roy (Newport E)


Davis, Terry (B'ham Hodge H'l)
Hughes, Sean (Knowsley S)


Dewar, Donald
Illsley, Eric





Ingram, Adam
O'Neill, Martin


Janner, Greville
Patchett, Terry


John, Brynmor
Pendry, Tom


Jones, Barry (Alyn &amp; Deeside)
Pike, Peter L.


Jones, Ieuan (Ynys M·n)
Powell, Ray (Ogmore)


Jones, Martyn (Clwyd S W)
Primarolo, Dawn


Kaufman, Rt Hon Gerald
Quin, Ms Joyce


Kennedy, Charles
Randall, Stuart


Kinnock, Rt Hon Neil
Reid, Dr John


Lamond, James
Richardson, Jo


Leadbitter, Ted
Robertson, George


Leighton, Ron
Robinson, Geoffrey


Lestor, Joan (Eccles)
Rogers, Allan


Lloyd, Tony (Stretford)
Rooker, Jeff


Lofthouse, Geoffrey
Ross, Ernie (Dundee W)


Loyden, Eddie
Rowlands, Ted


McAllion, John
Sedgemore, Brian


McAvoy, Thomas
Sheerman, Barry


McCartney, Ian
Sheldon, Rt Hon Robert


Macdonald, Calum A.
Shore, Rt Hon Peter


McFall, John
Short, Clare


McKay, Allen (Barnsley West)
Skinner, Dennis


McKelvey, William
Smith, Andrew (Oxford E)


McLeish, Henry
Smith, C. (Isl'ton &amp; F'bury)


McNamara, Kevin
Smith, Rt Hon J. (Monk'ds E)


McTaggart, Bob
Snape, Peter


McWilliam, John
Soley, Clive


Madden, Max
Spearing, Nigel


Mahon, Mrs Alice
Steel, Rt Hon David


Marek, Dr John
Straw, Jack


Marshall, David (Shettleston)
Taylor, Mrs Ann (Dewsbury)


Marshall, Jim (Leicester S)
Turner, Dennis


Martin, Michael J. (Springburn)
Wall, Pat


Martlew, Eric
Wallace, James


Maxton, John
Walley, Joan


Meacher, Michael
Wardell, Gareth (Gower)


Meale, Alan
Wareing, Robert N.


Michael, Alun
Welsh, Michael (Doncaster N)


Michie, Bill (Sheffield Heeley)
Wigley, Dafydd


Millan, Rt Hon Bruce
Williams, Rt Hon Alan


Mitchell, Austin (G't Grimsby)
Williams, Alan W. (Carm'then)


Moonie, Dr Lewis
Wilson, Brian


Morgan, Rhodri
Winnick, David


Morley, Elliott
Wise, Mrs Audrey


Morris, Rt Hon A. (W'shawe)
Worthington, Tony


Morris, Rt Hon J. (Aberavon)
Wray, Jimmy


Mowlam, Marjorie
Young, David (Bolton SE)


Mullin, Chris



Murphy, Paul
Tellers for the Noes:


Nellist, Dave
Mr. Frank Haynes and Mr. Frank Cook.


Oakes, Rt Hon Gordon



O'Brien, William

Question accordingly agreed to.

Clause ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.

To report progress and ask leave to sit again.—[Mr. Durant.]

Committee report progress; to sit again tomorrow.

Coroners Bill [Lords]

Order for Second Reading read.

The Solicitor-General (Sir Nicholas Lyell): I beg to move, That the Bill be now read a Second time.
This Bill consolidates the Coroners Acts 1887 to 1980, together with a small number of related enactments. The consolidation will result in the repeal of eight Acts, two of which are over 100 years old, together with parts of 12 other Acts. In order to produce a satisfactory consolidation, the Law Commission made two recommendations for amendment to the law to remove possible ambiguity. Effect is given to these recommendations in clauses 22 and 29 of the Bill.
The Bill has been passed in another place where, in the usual way, it was referred to the Joint Committee on Consolidation Bills. That Committee reported that the recommendations by the Law Commission are necessary for the purpose of producing a satisfactory consolidation of the law, and that the amendments that the Bill will make to the existing law give effect to those recommendations. With the exception of those amendments, the Committee reported that the Bill is pure consolidation.
Our thanks are due to the Law Commission and the Joint Committee for their work on this useful contribution to the continuing process of keeping the statute book in easily accessible form.

Mr. John Fraser: This is another chance for me to ingratiate myself with my Scots colleagues. I see no reason why the Bill should not go through quickly.

Mr. Barry Field: I do not wish to delay the House at this hour. I appreciate that this is a Second Reading of a consolidation Bill, and I do not wish to address the merits of the Bill. However, there are three points in the Bill that should have been considered in its consolidation.
On 26 November, as reported in column 268 of Hansard, I asked my right hon. Friend the Home Secretary for a copy of the coroner's report on the Hungerford

massacre. He replied that it was not publicly available, but that at my request he would draw it to the coroner's attention. I have heard nothing further since. I must therefore assume that coroner reports are not available to Members of this House or, indeed, to the public. I find that an extraordinary omission, given that judges' findings and the proceedings of a court of law are a matter of public record.
Secondly, the Bill does nothing for 1992 and the single European market. This might be a humorous point, but anyone who has suffered the tragedy of a death overseas and finds himself having to fight the labyrinth of EEC mismatched regulations in order to bring his loved ones home will appreciate what a serious problem this is.
The Bill, as far as I can ascertain, does not deal with the question that arose in a court case which requires a coroner to inquire into a death that occurs overseas. There is an astounding anomaly in that. The most famous case was that of Helen Smith, whose father has fought continually to prove that his daughter was murdered abroad.
Of course, there is a more far-reaching case, which is that of the loyal men who gave their lives in the service of their country in the Falklands war.

Mr. Deputy Speaker (Mr. Harold Walker): Order. It is difficult to relate this to the Bill, which is purely a consolidation measure.

Mr. Field: The requirement for the coroner to open an inquest in those cases caused considerable grief to the families. I should have hoped that this consolidation measure would have overturned that court case and put the law back where it was before that case was heard.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Peter Lloyd.]

Bill immediately considered in Committee; reported, without amendment.

Order for Third Reading read. [Queen's Consent signified]

Motion made, and Question, That the Bill be now read the Third time,put and agreed to.

Bill accordingly read the Third time, and passed, without amendment.

First Scottish Standing Committee

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): I beg to move,
That the proviso to paragraph (2) of Standing Order No. 86 (Nomination of standing committees) shall apply to the First Scottish Standing Committee in respect of the School Boards (Scotland) Bill with the substitution of the word `fifteen' for the word 'sixteen' in line 27 of the Standing Order.
I am sure that the whole House will regret the need for this motion, which arises from the illness of my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn), and will wish him a speedy recovery.
The effect of the motion would be to make a minor amendment to Standing Order No. 86 to enable a change to be made to the composition of the First Scottish Standing Committee in its consideration of the School Boards (Scotland) Bill. At present, the Standing Order provides that, where a public Bill is certified by Mr. Speaker as relating exclusively to Scotland, the Scottish Standing Committee considering it should include no fewer than 16 Members for Scottish constituencies. All that this motion would do is change that to 15 for consideration of this Bill.
Although the motion itself is unusual, the ideas behind it will be familiar to the House. It is a routine task for the Committee of Selection to alter the composition of a Standing Committee after it has begun its consideration of a Bill, either because of the illness or one of the members of that Standing Committee—as is the case here—or because of changes in appointments on the Treasury Bench or the Opposition Front Bench.
In this case, the matter cannot he left to the Committee of Selection because, to replace my hon. and learned Friend the Member for Perth and Kinross with another of my hon. Friends, the number of hon. Members for Scottish constituencies on the Standing Committee must be reduced slightly. It was, of course, open to us to keep the number at 16, continue with my hon. and learned Friend as a member and increase the size of the Standing Committee to add to it an hon. Member from the Opposition Benches together with two of my hon. Friends, to maintain proportionately the Government's majority. But it seemed to us that the course we have chosen was more likely to be for the general convenience of the House.

Mr. Dennis Canavan: Will the Leader of the House come clean and admit that this is yet another example of the Government changing the goalposts for Scottish democracy? Until January this year there was a long-standing tradition in the House for a quarter of a century or more whereby Scottish Standing Committees dealing with Scottish legislation consisted only of hon. Members representing Scottish constituencies. The only reason why the long-standing tradition was broken by the Government was that the Conservative party was rejected by 76 per cent. of the people of Scotland at the general election and was reduced to a discredited rump in this place.
Now we have yet another example of the Government changing the goalposts. Is it any wonder that, particularly in Scotland, there is not only decreasing respect for the Government, but decreasing respect for the House? That will continue if the rules of the House are to be changed in

such a way that the majority representatives of the people of Scotland do not have sufficient say on Scottish Standing Committees.

Mr. Wakeham: I am afraid that the hon. Gentleman's history is a little wonky on these points. There have been English Members on Scottish legislative committees for many years.
In this case the matter cannot be left to the Committee of Selection because in order to——

Mr. James Wallace: The Leader of the House gave one option, which was to increase the size of the Committee. Would it not be possible. within their own numbers, for the Government to appoint the right hon. Member for Ayr (Mr. Younger) to be a member of the Committee?

Mr. Wakeham: There are various options and I am in the process of trying to explain which I believe to be the best for the convenience of the House. No doubt, Mr. Deputy Speaker, if the hon. Member for Orkney and Shetland (Mr. Wallace) catches your eye, he will be able to give his views on the course that he thinks would be most convenient for the House.
Standing Orders in no way provide for or imply a Scottish Standing Committee that is constituted exclusively of Members representing Scottish constituencies. Hon. Members representing English constituencies have been selected for the Scottish Standing Committee on previous occasions. Indeed, my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot) made a valuable contribution to the Standing Committee considering the Housing (Scotland) Bill. My hon. Friend the Member for Dorset, South (Mr. Bruce) is already serving on the Committee considering the School Boards (Scotland) Bill.
I have no doubt that Opposition Members will volunteer another possible solution of simply replacing my hon. and learned Friend with an Opposition Member representing a Scottish constituency. That would give the Government their majority, and in the spirit of co-operation in which I am sure that offer would be made, I must say that I do not believe that that would be acceptable to the House generally. The basic requirement in Standing Orders that the composition of Standing Committees reflects the Government majority in the House as a whole is of longer standing and greater force than the Standing Order prescribing 16 as a minimum number of Members representing Scottish constituencies to comprise the Scottish Standing Committee.

Mr. John Home Robertson: The right hon. Gentleman said that that arrangement would he acceptable to the House as a whole. Does he understand that this proposal is unlikely to be acceptable to the people of Scotland? As the Government refuse to set up a Scottish Select Committee, as Conservative Members are making a mockery of Scottish Question Time and as the right hon. Gentleman is undermining the principle of scrutiny of Scottish legislation, what undertaking will he give that the Government still recognise the national entity of Scotland?

Mr. Wakeham: The hon. Gentleman is over-egging the pudding rather substantially. If he thinks that reducing the number of Members representing Scottish constituencies on the Scottish Standing Committee from 16 to 15 will be


of great concern to many people in Scotland he has a lot to learn. This relatively minor matter must be dealt with in accordance with the wishes of the House.
The Standing Order and the Sessional Orders that preceded it have provided for a different minimum number of hon. Members over the years. When considering, therefore, whether to abandon a fundamental requirement about the formation of, Committees of the House, or to modify slightly in this particular instance this aspect of Standing Orders, it is clear to me which should be the more mutable.
I hope that I have said enough to explain to the House briefly why we have moved the motion. My hon. and learned Friend the Member for Perth and Kinross has been unable to attend any sittings of the Committee considering the School Boards (Scotland) Bill so far, and looks very unlikely to be able to do so. In those circumstances, we need to make alternative arrangements, and the motion would enable those to be made in the way closest to the procedure that we customarily follow on such occasions by simply replacing my hon. and learned Friend with one of his colleagues. It represents a minor change to Standing Orders as they apply to the consideration of this Bill only. I commend it to the House.

Mr. Frank Dobson: The debate has been brought about in part by the sad illness of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn). At first sight, he is not a favourite character when viewed from the Opposition Benches. When he is present, he usually abuses me and mocks my constituency. Nevertheless, he is a colourful and unpredictable character whom most Opposition Members find infinitely preferable to the motley crew of merchant bankers, estate agents and second-hand car salesmen who attempt to adorn the Tory Benches.
There are few Scottish Tory Members to adorn the Government Benches because of the results of the general election, so that is all the more reason to wish the hon. and learned Member for Perth and Kinross a speedy recovery from his illness, which has literally and precisely decimated Tory Scottish representation by removing one in 10 of them. I remind the House that at the election the Tories won precisely 10 seats in Scotland, the Labour party won 50 seats, and the other parties won 12 seats.
Standing Orders require at least 16 members of a Standing Committee considering a Scottish Bill to be Members representing Scottish constituencies, which is not an unreasonable requirement. Tonight's motion would reduce that number to 15 in respect of the School Boards (Scotland) Bill—and not because there are not enough Scottish MPs to make up the number specified in the Standing Order. In fact, there are enough Scottish Tory Members to fill the place occupied at present by the hon. and learned Member for Perth and Kinross. As the Leader of the House admitted, the tenth Tory would be the right hon. Member for Ayr (Mr. Younger), who is the Secretary of State for Defence. He might have difficulty in attending, but, even if he did, the Government would still have a majority of four over all the other parties on the Committee in question, so the appointment of the right hon. Gentleman would not put their legislation in

jeopardy—provided, of course, that they can rely on the votes of some of the other Conservative Members on the Committee. That might be one explanation for this motion.
It is curious that the Tory party, which got just 14 per cent. of the seats in Scotland at the general election, should get 60 per cent. of the seats on the Committees considering Scottish business under the Standing Orders. The Labour party, which got 69 per cent. of the seats in Scotland, gets only 36 per cent. of the seats on the Committee. No doubt my Scottish colleagues will have more to say on that subject before the debate is through.
The plain fact is that without endangering their majority the Government could easily find an extra Scottish MP, from literally any of the parties in Scotland, to serve on the Committee. They are refusing to do so. Instead, they wish to augment their side of the Commitee with English Members. That would be bad enough in itself, but what angers me and those of my right hon. and hon. Friends who represent Scottish seats—and, I am sure, the people of Scotland—is the stark contrast between the speed with which the Government in general and the Leader of the House in particular have decided to deal with their problem on the Scottish Standing Committee and their abject and insulting failure to establish the Select Committee on Scottish Affairs.
The loss of the services of the hon. and learned Member for Perth and Kinross is inconvenient to the Government, so the Leader of the House has come dashing to the House with a proposal to help. Contrast that with his sloth over the Select Committee on Scottish Affairs. The people of Scotland are right to be angry. Scarcely two weeks have elapsed since the Committee on this Bill was established, yet the Leader of the House is changing its composition. Five months have passed since the House set up the other departmental Committees and still no action is set to take place on the Select Committee on Scottish Affairs.
On 13 January, the Leader of the House said:
The Select Committee on Scottish Affairs is not a second-class Committee; it is as important a Select Committee as any other and should be formed in the same way."—[Official Report, 13 January 1988; Vol. 125, c. 401.]
We entirely agree with that, and we want to know why the Leader of the House has not got on with setting it up.
In all seriousness, it seems to me that the current Leader of the House sees his role as that of an emeritus Government Chief Whip—a Chief Whip in semi-exile at the other end of the Chamber. Let us consider what some of his predecessors have said and what the learned textbooks say about the job. They all say that, besides having a duty to get the Government's business through the House, the Leader of the House has further and wider duties. He has a duty to secure in part the interests of the Opposition, minority parties and Back Benchers. I have to add to that, in the peculiar electoral circumstances that now prevail, that he has a duty to secure the interests of the people of Scotland. I am afraid that the right hon. Gentleman does not seem to discharge those duties particularly well, or even to take them seriously.
I have looked in some of these textbooks for a quotation that aptly describes the duties that the right hon. Gentleman is supposed to carry out. He might say that any of those textbooks was prejudiced, being written by academics who might even be Socialists. I thought that I


would go to the fount of all wisdom, and I have a document entitled,"List of Ministerial Responsibilities", which was issued in February 1988 by the Cabinet Office.
The Privy Council office is referred to there and the duties of the Lord President of the Council and Leader of the House of Commons include upholding
the rights and privileges of the House as a whole,
besides his duty to get Government business through the House.
There is no doubt that after the debate is over he will get this motion through by using the weight of the English majority that is at his command to reduce the number of Scottish Members on the Standing Committee. But the right hon. Gentleman should remember that he has those wider duties. He has said that we have a unitary House of Commons. We want to maintain the Union of Scotland with England. Every time something happens in the House that undermines the rights of proper representation of the Scottish people by those whom they elected, damage is done to the Union to which the Conservative party as well as the Labour party is supposed to subscribe.
The right hon. Gentleman may get away with it tonight, but he must take seriously the rights, needs and duties of those right hon. and hon. Members who were elected by the people of Scotland to represent them in the House. If he continues to treat them in the light-hearted, casual and cavalier way that he has since the general election, he will harm his reputation and that of the Tory party—although it is scarcely possible to harm it more than it has been harmed in Scotland. He will also harm the future of the House and the concept of the Union between England and Scotland. He should take this matter seriously.
I hope, whatever happens tonight, that the right hon. Gentleman will set up the Select Committee on Scottish Affairs in the very near future to allow the representatives who were elected by the people of Scotland to get on with their task of representation, just as Members from every other part of the country are carrying out their task of representation, investigation, surveillance and monitoring on the other Select Committees. He will fail in his duty to the House and the country if he does not do so.

Mr. Allan Stewart: I am not sure whether my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn) will welcome the tribute that was paid to him by the hon. Member for Holborn and St. Pancras (Mr. Dobson). Perhaps when my hon. and learned Friend returns he will respond in his inimitable way. The whole House will agree with the Leader of the House and with the hon. Gentleman in wishing my hon. and learned Friend a speedy recovery.
This debate is not about the Select Committee on Scottish Affairs, but I shall respond briefly to what the hon. Member for Holborn and St. Pancras has said about it. He is being completely unfair in this matter to my right hon. Friend the Leader of the House, who has tried very hard to set up the Select Committee on Scottish Affairs. He has been faced with the fact that some hon. Friends, including myself, which I say openly, refuse to serve on the Committee. [HON. MEMBERS: "Why?"] For reasons that I have made clear publicly over many months in the House and outside.
The hon. Member for Holborn and St. Pancras was a little ingenuous, to put it mildly, on this issue. He must know the position with regard to the composition of

Standing Committees, which is referred to in "Erskine May". It says that they have developed since the 1880s to meet demands made upon the time of the House by the consideration of Bills in Committee of the whole House.
…the Committee of Selection is directed to have regard…to the composition of the House.
The key point is that a Standing Committee is undertaking functions that would otherwise be undertaken by the whole House sitting in Committee, as it did today when considering the Finance Bill. For that reason, Standing Committees must reflect the composition of the House.
In this instance, the Opposition are endeavouring to use the illness of my hon. and learned Friend the Member far Perth and Kinross as a political weapon.

Mrs. Margaret Ewing: Given that my party and myself have no access to the Committee, does he accept that we have no political axe to grind about the illness of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn)? There is a strong argument to reflect political opinion in Scotland, as expressed at the last election, on the Committee to ensure that the genuine opinions of the Scottish people are voiced in that Committee. In that way we could reach genuine conclusions that reflected political and public opinion.

Mr. Stewart: If the hon. Lady regrets that her party is not represented on the Committee, I remind her that there is an obvious way of achieving that without changing the Standing Order. If the Opposition had agreed to increase the numbers on the Committee, that would——

Mr. Wallace: I represent all the minority parties on the Committee of Selection. If the increase mentioned by the Leader of the House had been agreed, there is no way in which another member of a so-called minority party would have been allowed on the Committee as my hon. Friend the Member of Gordon (Mr. Bruce) was already on it. The hon. Gentleman's argument is factually incorrect.

Mr. Stewart: The decision reached would have to be the result of negotiations between Opposition parties. It was perfectly possible for an extra member from the Opposition parties to be appointed to the Standing Committee if they had agreed that the Committee membership be increased from 18 to 20 members. If that had been agreed, there would have been no need to change the Standing Order.
The hon. Member for Moray (Mrs. Ewing) may say that that would mean that the Labour party insisted upon a Labour Member. That may be the case, but it would have been possible to increase the numbers on the Committee without changing Standing Order No. 86. The official Opposition have refused to take such action. That is why my right hon. Friend has had to table the motion.
I support the motion, but I believe that my right hon. Friend is wrong not to tackle the problem in a more fundamental way because the Standing Order amendment applies only to the School Boards (Scotland) Bill. But the problem will persist.[Laughter.] I do not know why hon. Members are laughing. The problem will persist because my hon. and learned Friend the Member for Perth and Kinross is unlikely to be back in the House when the Civil Evidence (Scotland) Bill is considered by the Standing Committee. When the Bill comes into Committee, my right hon. Friend will be faced with exactly the same problem. The Government should fundamentally consider the problem because it could recur throughout the Parliament.

Mr. Canavan: Change the goalposts.

Mr. Stewart: The hon. Gentleman has a long record of attending Scottish Standing Committees without being a member. I do not know whether he will repeat his efforts on the Housing (Scotland) Bill or the School Boards (Scotland) Bill.
It is wholly unreasonable for the Secretary of State for Defence to serve on Scottish Standing Committees. It is also unreasonable for all four Scottish Office Ministers to serve on a Scottish Standing Committee when three of them, as happened on the Housing (Scotland) and the School Boards (Scotland) Bills, will contribute nothing apart from voting.

Mr. Home Robertson: Has it occurred to the hon. Gentleman that a party that cannot get its members elected in Scotland should not introduce controversial legislation for Scotland? Is he aware that the last fundamental change to this aspect of the Standing Order—reducing the number of Scots required to be on the Scottish Standing Committee—was introduced in November 1971 by his right hon. Friend, now Lord Campbell of Croy, then the Secretary of State for Scotland?
The reasons that the noble Lord gave for reducing the numbers then were in part to do with the fact that the Tories did not have enough Members then, either, but also specifically so that Conservative Members could be available to serve on the Select Committee on Scottish Affairs. These problems keep returning to haunt the Conservative party. If there is to be a reduced number on the Standing Committee, why cannot we have a Select Committee?

Mr. Stewart: Considerations to do with the Select Committee are wholly irrelevant to the motion.
I do not think this problem will go away in Scottish legislation. I hope that my right hon. and hon. Friends on the Front Bench will consider changing the Standing Orders for future Bills in a way that will reasonably allow Ministers to undertake their ministerial duties, so that the whole Scottish Office team will not have to sit on a Standing Committee, which is not reasonable.

Mr. James Wallace: As the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) is temporarily indisposed, we take this opportunity to wish him a speedy recovery to full health. It would appear that he is not so indisposed, however, as to be prevented from giving quotations to The Sun.I note that last Monday he was quoted as saying:
It strikes me as amazing that here we have 640 certificated alcoholics on a 24-hour licence and the catering services make a loss.
That is the sort of comment for which the hon. and learned Gentleman is well renowned. When he serves on Scottish Standing Committees, he is not Lobby fodder; my experience is that he generally makes a vigorous——

Mr. George Foulkes: Spirited?

Mr. Wallace: —spirited contribution to the proceedings. We regret his illness and hope that he will soon be back with us.
The motion reflects a considerable problem in the Conservative ranks. It will not be as easily resolved as the hon. Member for Eastwood (Mr. Stewart) suggested. He said that if the Committee were increased to 20 it would be possible for the Opposition to agree that an additional member of the so-called minority parties should serve on it.
As hon. Members will recall, when we debated the composition of the Select Committee on Televising the Proceedings of the House, the Government and Opposition Front Benches emphasised time and again that only one member of the minority parties would be represented on a Committee of 20. I am sure that the hon. Member for Eastwood voted for that at the end of the day. So it is disingenuous of him to claim that there would be an additional member from the minority parties on the Committee if we increased it to 20. That is not what the conventions of the House allow.

Mr. Allan Stewart: I did not claim that. I claimed that it would have been possible to increase the numbers on the Committee to 20, which would have given the Opposition an extra member.

Mr. Wallace: With respect to the hon. Gentleman, he suggested that might have been the position taken by the hon. Member for Moray (Mrs. Ewing).
It is clear that the Government have a problem. They managed to get only 10 Scottish Members at the general election. In spite of that, in the weeks and months following the election, the Secretary of State for Scotland assured us that it would be business as usual. He was totally unperturbed, yet, 10 months later, the Leader of the House has to come and change the rules. The Government know that they cannot have business as usual because they do not have the numbers to sustain business as usual.
The Government could have business as usual, if they were prepared to allow the right hon. Member for Ayr (Mr. Younger) to serve on that Committee. The Committee of Selection is a remarkable Committee. It is one of the few Select Committees that does not apply to the Liaison Committee for permission to travel abroad, much to the regret of many of my colleagues on that Committee. The Committee was recently asked to nominate members for a Standing Committee on statutory instruments, dealing with a legal aid order. The list contained the names of some illustrious Conservative Members, including the right hon. Member for Ayr. I do not demean the importance of that issue, but if that Committee was sufficiently worthy to have the right hon. Gentleman as a member, the Committee on the School Boards (Scotland) Bill—an important issue affecting the future of Scottish education—is also worthy of the right hon. Gentleman. The Ministry of Defence does not bring legislation before the House in great volumes. I suspect that it is a long time since the right hon. Gentleman served on a Standing Committee. I am sure that it would do him good to repeat the experience, and it would avoid the need for the Government to come to the House this evening to change the rules.

Mr. Foulkes: Does the hon. Gentleman agree that there are particular problems in Ayr, Prestwick and Troon, in respect of Ayr academy and a number of other school matters, which would make it particularly important for the right hon. Gentleman to serve on that Committee?

Mr. Wallace: I do not know as much about the issues affecting Ayrshire as the hon. Gentleman, but I have great respect for the right hon. Member for Ayr and his local knowledge would enable him to make a valuable contribution to the Committee.

Mr. Norman Buchan: Will the hon. Gentleman give way?

Mr. Wallace: I am sure that the hon. Gentleman will have an opportunity to speak.
If the House agrees to the motion, as it no doubt will, who will be the substitute for the hon. and learned Member for Perth and Kinross? A couple of weeks ago, when we were debating the so-called Mates amendment, pressure was brought to bear by the Whips. Was that rebellion contained by the threat that those hon. Members who dared to oppose the Government on that occasion might find themselves on the Standing Committee on the School Boards (Scotland) Bill? That would perhaps have been a more effective deterrent than the specious suggestion that the Government were going to amend in any significant respect the rebate provisions relating to the poll tax.
I suspect that the onus may be put on someone whose experience of Scottish education is a cold shower at Gordonstoun or, worse still, at Eton. I am sure that my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston) had no racist intent when he said, looking at the serried ranks of the double-breasted, new Conservative Members after the 1983 election, that it was like meeting a delegation of Japanese business men—he could not tell them apart. I regret that the hon. Member nominated to the Committee might not have the flair and flavour of the contribution that one could have expected from the hon. and learned Member for Perth and Kinross.
The Opposition will be alienated by the fact that there is a principle at stake. We regret that an hon. and learned Member is ill, but the hon. Member for Eastwood was frank when he made a point that has been made time and again. With regard to the Civil Evidence (Scotland) Bill, I suspect that the Government will he quite pleased because we all know that the hon. and learned Member for Perth and Kinross is an opponent of the Bill and it will do the Government no harm to have him out of the way.
However, the matter of principle is the change in the rules. The Leader of the House tried to dismiss the objections by saying that the Government were offering 15 instead of 16. Sixteen is a significant figure. It is the minimum number for a Select Committee and I am certain that that number was included in the Standing Orders after some thought. To depart from that figure is a matter not just of incidental interest for the House, but of some principle.
It is important that we should uphold that principle, and I am sure that we will attempt to do that tonight. However, we all know that the Government have sufficient English Members to vote through whatever they want. They are the type of English Members who voted for the poll tax in Scotland, yet wore their hearts on their sleeves when it came to the poll tax for England. We know that type. We know where their principles lie when it comes to their self-interests, and they certainly do not lie with the interests of Scotland.
For that reason we will oppose the motion. We accept that the Government will always get their majority in the House, but when the people have their say—as they will on Thursday—they will give their verdict and it will not be for the Government.

Mr. Bill Walker: They may have changed the name of their party, but they have not changed their humbug. The hon. Member for Orkney and Shetland (Mr. Wallace) said that my right hon. Friend the Member for Ayr (Mr. Younger), the Secretary of State for Defence, might have been included as a member of the Committee. When was the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel)—the leader of what was called the Liberal party—last a member of a Scottish Standing Committee? I make no criticism of the right hon. Gentleman because I understand that he has other duties and one would expect him to carry them out. Quite properly a leader of a party must do that. The right hon. Gentleman would be the first to accept that a senior Government Minister, running one of the major Departments, could not, and would not be expected to, carry out duties in a Standing Committee.
We do not expect the right hon. Member for Tweeddale, Ettrick and Lauderdale to serve on every Standing Committee, and we should not hear the kind of humbug——

Mr. Wallace: rose——

Mr. Foulkes: rose——

Mr. Walker: I shall give way to the hon. Member for Orkney and Shetland in a moment if he will just let me finish. What I have to say is very important.
Conservative Members need no lessons about service on Standing Committees. I draw the attention of the House to those Members who head the attendance list—and have done so in the previous two Parliaments—for Standing Committees. The hon. Members with the most hours in Standing Committees are Scottish Conservative Back-Bench Members.

Mr. Wallace: I am grateful to the hon. Gentleman for giving way. He uses the opting out provisions of the Select Committee on Scottish Affairs whenever he can. Will he accept that my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) served on the Standing Committee of the Salmon and Freshwater Fisheries Bill after becoming leader of the party?

Mr. Walker: My right hon. Friend the Member for Ayr has served on a Scottish Standing Committee in this Parliament, and the hon. Gentleman drew our attention to that, but he is still coming out with the same humbug.
Opposition Members quite properly drew attention to the fact that the situation has been brought about by the absence of my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn). Quite properly, all hon. Members will wish my hon. and learned Friend a speedy recovery. Anyone who thinks that we in this House are immune from illness and that parties will not be affected is not living in the real world. Equally, we must recognise and acknowledge that nothing is permanent in politics and that we live in a transient situation. Labour Members are very thin on the ground in southern England.


Only one Labour Member has been elected in an area with about 15 million people. That is three times the population of Scotland, yet there is only one Labour Member.
That imbalance is, quite properly, taken into account by the fact that "Erskine May" lays down that the Selection Committee must take into consideration the composition of the House—not any particular geographic composition, but the general composition of the House. The Labour party would do well to remember that, because in recent times it has never formed a Government without being in a minority in England. It is important that the Opposition realise that they, like us, are the party of the Union. If the Labour party really believes itself to be the party of the Union, it must recognise that if it ever hopes to form a Government it will probably do so with a minority of English Members.

Mr. Malcolm Bruce: Does the hon. Gentleman accept that the analogy he draws between parts of England and Scotland is not only irrelevant but offensive? This is the United Kingdom, in which Scotland is a nation. We came into the Union, and that is why many of us insist that Scotland's nationhood should be accepted by this House in the way that it is not accepted at present.

Mr. Walker: I need no lessons from the hon. Gentleman about my loyalty to Scotland and about its being a nation. I recognise that eight out of 10 people who live in these islands live in England, that one person in 10 lives in Scotland, and that eight out of 10 of all taxpayers live in England and only one out of 10 in Scotland. One must bear that in mind when operating a unitary parliamentary system. For Opposition Members constantly to suggest that they are the only people who recognise and care about the Scottish dimension is more humbug from the same Benches. I do not doubt the integrity of hon. Gentlemen and their fight for Scotland, and I trust that they do not doubt mine. I mean that seriously. The hon. Gentleman must remember that we come to this Parliament as Members of a unitary Parliament, not as Members from any individual part of the unitary system.
I may say to my right hon. Friend the Leader of the House that I, like my hon. Friend the Member for Eastwood (Mr. Stewart), am disappointed that we have not taken the opportunity to rectify what is obviously a problem. It would take only one right hon. or hon. Member to fall ill. I remind my right hon. Friend that it was through good luck—nothing else—that my eyes were not damaged a week ago last Sunday. The skin around my eyes was damaged, but I was able to attend the House and be on duty to maintain our majority in the Standing Committee. Had my eyes been damaged in the accident, the probability is that I could not have attended, however much I might have wanted to do so. We shall be faced with that sort of problem continually throughout this Parliament.
We must find a practical solution to maintaining the balance of the House, while at the same time recognising the record of Scottish Conservatives in the hours they spend in Standing Committees. That is the point with which I began my speech, and my right hon. Friend might bear it in mind. We have never been found wanting in doing our duty in getting legislation through the House. Indeed, Scottish Conservative Members have the best

record of attendance and the best record for hours of attendance in Standing Committees, and that should be kept in mind when selecting Members for Standing Committee membership.

Mr. Norman Buchan: It is always a great pleasure to follow the hon. Member for Tayside, North (Mr. Walker), especially as he can do himself so much damage by the removal of safety glasses. I shall treasure that story. The wisdom that is inculcated by that kind of behaviour is a moral to all Opposition Members.
The Standing Committee in question is not an isolated, run-of-the-mill Committee. It has been entrusted with an extremely precious obligation, and that obligation has been laid upon it by no less a figure than the Prime Minister herself. That point seems to have been forgotten. I cannot understand why the right hon. Member for Ayr (Mr. Younger) is not rushing to the Prime Minister's defence. After all, he is the Secretary of State for Defence. The Prime Minister laid that obligation upon the Parliamentary Under-Secretary of State for Scotland, among others, and now the Secretary of State for Scotland has had to fall into line. The hon. Member for Eastwood (Mr. Stewart) has now been entrusted with the dirty work. That is what is happening, and for them now to fail to ensure that their mistress's will is carried out, by providing yet one more Tory Member for the Standing Committee, seems to me to be an extraordinary phenomenon.
Nor is it unusual to see that the same kind of arrangement, with the same kind of behaviour by the Prime Minister, has taken place in relation to this Committee as, apparently, has taken place in a number of causes celebres, from Westland onward. I refer to the involvement by the Prime Minister, the denials by the Prime Minister and the leaks in relation to the Prime Minister. We should like to know from where the leak emanated.
I cannot think of any more expert member of the Committee than the Secretary of State for Defence to inquire into that leak on the School Boards (Scotland) Bill. Clearly, before the Government advance much further with the Bill, they must find out the background of the leak. Previous leaks have often been investigated by Select Committees. This one is being investigated at No. 10 itself. The only Committee in existence that can explore the leak of the information that the hon. Member for Eastwood was to ensure the proposal of an opt-out clause had to be this Standing Committee. I see that the hon. Member for Eastwood is at the starting gate and ready to go.

Mr. Allan Stewart: The issue was raised with me on Second Reading by the hon. Member for Linlithgow (Mr. Dalyell). The hon. Gentleman entirely accepts that there was no question of any conspiracy or plot involving me. I hope that the hon. Gentleman will make it clear to the House that my intention of putting forward an opting-out amendment had been made public in the House long before the letters to which he refers.

Mr. Buchan: Perish the thought that I should suggest that so innocent a Member as the hon. Member for Eastwood would become involved in anything so dishonourable as a conspiracy. It was nowhere near my intention to make such a suggestion. If I were the Prime Minister, I would not have trusted him in a conspiracy


either. The person whom she could trust in a conspiracy is the Under-Secretary of State for Scotland, the hon. Member for Stirling (Mr. Forsyth). The hon. Member for Eastwood was the fall guy, and I completely accept his innocence.
We have another Tory available to be appointed to the Committee: the Secretary of State for Defence. As my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has pointed out, there is every good reason why, for educational purposes, he should be there.

Mr. Foulkes: rose——

Mr. Buchan: I knew that was going to happen.

Mr. Foulkes: Does my hon. Friend agree that there are 182 good reasons why the Secretary of State should be on the Committee? [HON. MEMBERS: "Ninety-one."] I am sorry; 91 good reasons. If the right hon. Gentleman wants to ingratiate himself with 100 or so people in his constituency to ensure—albeit in vain—his continued existence as a Member of the House. he ought not just to be pulled on to the Committee; he should be eager, anxious, even desperate to serve on it.

Mr. Buchan: I can only presume that it is because of the desperation that my hon. Friend describes that the right hon. Gentleman has been prevented from serving on the Committee. There are other elements of the conspiracy. By the way, I do not like the mathematics of those educated in Scotland. Surely the figure is not 91 but 92–91 plus one. I do not know what is happening to Scottish education under the present Government.
It was not only right and essential that the Secretary of State—who was apparently desperate—should be on that Committee; it was necessary because of the leak. We want to know who blew the gaff on the conspiracy. That is even more interesting than the conspiracy itself. I only wish that my hon. Friend the Member for Linlithgow (Mr. Dalyell) had spoken—perhaps he will do so after me—for he is a great expert on these matters. But it is a very interesting story, which only the Standing Committee could elicit. No Ministry is more experienced on the question of leaks than the Ministry of Defence. It is an expert Ministry, and we should have welcomed the presence of the Secretary of State for Defence to explore the question.

Mr. Deputy Speaker (Mr. Harold Walker): Order. This is very interesting, but I find it difficult to relate to the motion. I hope that the hon. Gentleman will return to the motion.

Mr. Buchan: It might have seemed convoluted and distant, but such is the intricacy of this Government. They seem to be able to drag distant elements into the most peculiar places. In this case, the Secretary of State for Defence would have been the 10th or 11th man on the Committee. As far as I know, he was available and able to serve.
Hon. Members representing Scottish constituencies were complaining not about putting an additional Scottish Member on the Committee, which was obvious, and, as I have shown, eminently desirable to get at the truth, but about the Government wanting to reduce the number by one and cutting out a member of the Committee instead of bringing on the available Scottish Member.
It is even more strange because I am also serving on a Committee tomorrow, an absolutely Scottish Committee,

to consider the Salmon (Weekly Close Time) Scotland Regulations 1988—[Interruption.] As if upon cue, my hon. Friend the Member for Cunninghame, North (Mr. Wilson), the expert on salmon, has arrived. Suddenly he sniffs salmon in the air and he arrives. That Committee has 20 members to discuss a statutory instrument, but here the Government cannot get more than 15 Members for a Standing Committee which has so much to explore. They have imported five additional Tory Members on to the Committee. We know they are short of numbers, but the selection is indeed interesting. I shall not name them all—that would be invidious—but one in particular attracts my attention. It shows the state of the Conservative pansy that the Government have appointed to a Committee on a statutory instrument meeting at half past 10 on a Wednesday morning—that must be a record for the right hon. Gentleman—the chairman of the 1922 Committee.

Mr. Brian Wilson: I remind my hon. Friend that the chairman of the 1922 Committee is on that Committee because, like so many hon. Members in this House and in the other place, he is up to his neck in salmon vested interests.

Mr. Buchan: I should never have given way to my hon. Friend. He has taken my best line. There is nothing like salmon for getting the Tories to rise to the bait. Like the falls of Pitlochry, they leap to keep an eye on king salmon. If only we could bring salmon and the freshwater fisheries of Scotland into the ownership and control of the people of Scotland, we would slash the tyranny of king salmon, and some of us who have been given the opportunity will say so tomorrow. However, I seek not to stray from the motion.
In the absence of the Secretary of State for Defence, at least we have the Secretary of State for Scotland, the Under-Secretary of State for Scotland and the hon. Member for Eastwood—who has interfered so much in my constituency, but I can forgive him for that—who between them will tell us not who started the conspiracy, but who gave the leak to the Glasgow Herald in an exchange of letters.
Was it the Under-Secretary of State for Scotland? Was it one of his civil servants? I cannot believe that, as I know the civil servant who serves under or over him. The hon. Member for Eastwood has already said that he was not involved in the conspiracy or the leak. The Secretary of State for Defence, the expert in leaks, was not involved. So we are left with two people. One is the Secretary of State for Scotland. He looks so innocent. Who could suspect him of a leak? However, as Sherlock Holmes once said, "When you have eradicated all the possible solutions, the one that is left is the only possible one." Who is left? The Prime Minister herself. We should like an answer on that.

Mr. Deputy Speaker: Order. I do not see anything in the motion that could lead the hon. Gentleman to his argument about leaks. I hope that he will address himself to the motion.

Mr. Buchan: If I had had a little more warning. I could have clearly shown the relationship between that Committee and the leak. But my main point is that had the one remaining Scottish Conservative Member been appointed to the Committee he might have given us the source of that leak.
As I have not been appointed to the Committee, I have some questions for someone who has and who is here. If I had been on the Committee I would have asked that hon. Member how many of his constituents go to an overcrowded school in my constituency. I would have asked him how many Eastwood constituents are in schools in my constituency where they are seeking to create problems. "How many came from outside Paisley?" would be a useful question. I regret that I have not been appointed to the Committee, so I cannot challenge him other than by swords and thorns at half past 11 at night.
These are serious discussions about the problems put forward by members of the minority party and by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). I speak also for my colleagues in the Scottish Labour party. We would have preferred more Scottish Members and fewer Tory Members on the Committee, and the elections on Thursday will show that the people of Scotland feel the same.

Mrs. Margaret Ewing: First, let me emphasise the kind regards that I send to the hon. and learned Member for Perth and Kinross (Mr. Fairbairn). We all wish him a speedy recovery from his illness. This debate is no criticism of the hon. and learned Gentleman.
As always when we discuss matters relating to Scotland, this debate has shown itself to be an embarrassment to the Government. It has provided us with one of the keenest arguments in support of the televising of the House. That would ensure that our proceedings are relayed to the people of Scotland so that they can see that the minority viewpoint proposed by the Conservative party is completely alienated from the majority view in Scotland. The arguments tonight also show the desperate need for decentralisation, because education in Scotland is, after all, traditionally seen as being separate, different and worthy of support.
The School Boards (Scotland) Bill is one of the most important pieces of legislation that faces us during this Parliament. All Scottish hon. Members must be aware from their mail bags of the various priorities allocated by our constituents to various pieces of legislation. The responses from my constituents clearly show that their first priority is the poll tax, on which the verdict will be given on Thursday; secondly, the housing benefit and social security changes; and, thirdly, the education proposals for Scotland, and, in particular, the School Boards (Scotland) Bill.
Ever since the initial proposals were brought forward I have had a heavy correspondence, not only from my constituents, but from people from all areas of Scotland, expressing their anxieties about the Government's proposals. The School Boards (Scotland) Bill must be treated as a serious piece of legislation, and the composition of the Committee should also be treated seriously.
The Government appear to be trying to set a precedent for reducing the number of Scottish Members on a Scottish Standing Committee from 16 to 15. I fully appreciate that when the Committee was established the Leader of the House and the Committee of Selection were faced with a problem because several hon. Members were

serving on Standing Committee D which was dealing with the British Steel Bill, but that Bill completed its deliberations at about 6 pm this evening, thus releasing five hon. Members to participate in this Standing Committee.
Although many Opposition Members have emphasised the role of the Secretary of State for Defence, the right hon. Member for Ayr (Mr. Younger), it is worth noting that the Minister of State, Scottish Office, the hon Member for Galloway and Upper Nithsdale (Mr. Lang), has now been released from his responsibilities in Standing Committee D. [Interruption.] I am sorry, I did not realise that the hon. Gentlemen was already a member of the First Scottish Standing Committee. Four Opposition Members have been released to serve on that Committee. It is important to recognise that, given the importance of the legislation to Scotland, hon. Members are willing, available and wish to serve on the Committee.
The precedent is important. If the Government solve their problems of minority representation in Scotland by reducing Scottish representation on a Scottish Standing Committee, there is every likelihood that, after the next general election, Conservative Scottish representation will be reduced even further. Are Scottish hon. Members increasingly to be denied the opportunity to serve on Standing Committees, so that Conservative Members who represent English seats are given access to such Committees, to vote and to decide on legislation that is of importance to the people of Scotland? That is a dangerous precedent for the House to set. I hope that the Leader of the House and other Conservative Members will think carefully before they cast their votes. They are treading a dangerous path. It denies democratic aspirations.
As the hon. Member for Gordon (Mr. Bruce) said, Scotland must be regarded as a nation, not as a region. If we deny Scotland's right as a nation, we are in danger of denying Scottish people their democratic aspirations, and we would be treading a dangerous path.
I speak as a Member of a party that has been denied access to the Committee. I was grateful to the shadow Leader of the House, the hon. Member for Holborn and St. Pancras (Mr. Dobson), for mentioning the rights of minority parties. Perhaps it would have been more helpful if he had made it clear that it is a matter of ensuring, not that a Labour Member, but that an Opposition Member, becomes a member of the Committee. As a minority party, having fought all 72 seats in Scotland——

Mr. Wallace: Seventy one.

Mrs. Ewing: We fought 72 seats in Scotland, having strongly argued that the people of Scotland should opt for self-government. We won three seats, having fought democratically for our right to representation. We are not trying to achieve that result in any way other than through the ballot box. We have a legitimate right to have our voices and opinions heard in Standing Committees.
On Second Reading I spoke not only as my party's education spokesman but as an ex-teacher within the Scottish education system. I have a deep knowledge of needs within the education system. We have a great deal to offer the debate in Standing Committee.

Mr. Ernie Ross: The hon. Lady said that the Scottish National party fought democratically. Will she explain the recent decision by some members of the Scottish National party to break the law with regard to


the community charge and encourage other people in Scotland, who perhaps do not understand the charge, also to break the law?

Mrs. Ewing: It is interesting to hear that some of the loudest plaudits for that stance have come from Members of the party of the hon. Member for Dundee, West (Mr. Ross). We are challenging the legality of the Government to impose a tax on people who opposed that form of taxation in the democratic processes of the general election.
I shall now return to the right of the Scottish National party to have its voice heard on the Committee. I speak with the authority of someone who went through the training procedures within the Scottish education system. I worked as a remedial teacher within the Scottish secondary education system. I believe that we have a real opportunity to offer genuine opinions and options on this Committee. We have been denied that opportunity because the Government have taken the coward's way out. They have decided to reduce the membership of the Committee rather than increase it and face democratic aspirations. The Government are treading a dangerous path and judgment will be given, not only on Thursday of this week, but in future general elections, when people recognise that the Government are intent on destroying the Scottish education system, which we treasure and value.

Mr. Tam Dalyell: I shall be as helpful and constructive as ever to the Leader of the House. I can offer a way out. The Secretary of State for Defence is far too busy. He has to attend NATO planning groups and he has to go to Brussels and Washington. However, there is one English Member who could contribute a vast amount of knowledge and enlightenment to this debate. [HON. MEMBERS: "The Prime Minister".] That is it. Why go for the monkey when we can have the organ grinder? The right hon. Member to whom I am referring is the Member who dispatched Professor Brian Griffiths—a special sort of nuncio or emissary—to talk to heaven knows who in Strathclyde behind the backs of the local authorities.
Why should the Select Committee mess around with the Secretary of State for Defence, who could only do the job second hand, when it could find out first hand why the right hon. Member in question came to the aid of her hon. Friend the Member for Stirling (Mr. Forsyth)? The right hon. Lady could explain her motivation in getting her office to leak the correspondence on the benefits of opting out and the promotion of her own view.
I do not wish to be long at this time of night, but if we cannot have Perth and Kinross, why should we not have Finchley?

Mr. John McAllion: Like my hon. Friend the Member for Linlithgow (Mr. Dalyell), I would welcome the addition of the Prime Minister to the Committee on the School Boards (Scotland) Bill. That would at least guarantee that she will learn something about Scottish education. On a recent visit to Scotland, the right hon. Lady visited my constituency and expressed astonishment that Scottish schools were not run by boards of management, as they are in England. That is rich from someone who has been Prime Minister of Scotland for nine

years. The hon. Lady does not even know how the Scottish education system is run. She would clearly benefit from membership of that Committee.
I was impressed earlier in the debate with the passion expressed by the hon. Member for Tayside, North (Mr. Walker). He gave expression to his Unionist sympathies and sentiments. That is only to be expected from an hon. Member who has the nickname "Biggles" and who can be seen strutting around the streets of Perth bedecked in his kilt, tartan and bowler hat, without seeing a thing. He really gives physical presence to the very idea of Unionism.

Mr. Wilson: My hon. Friend speaks of the hon. Gentleman wearing a bowler hat. Was there an Orange walk on in Perth that day?

Mr. McAllion: I would not slur the hon. Gentleman to that extent.
I would like to join all the other hon. Members who have spoken in this debate and say that I regret the illness that has afflicted the hon. and learned Member for Perth and Kinross (Mr. Fairbairn). Unlike the hon. Member for Orkney and Shetland (Mr. Wallace), I cannot vouch for the independence of the hon. and learned Member for Perth and Kinross in Committees. I have served with him only on the Standing Committee dealing with the Housing (Scotland) Bill and he did not show a great deal of independence on that Committee. He voted with the Government in every Division except one. However, he was good entertainment value. I remember that during one late-night sitting, when we were debating some obscure part of the legislation, the hon. and learned Member for Perth and Kinross made a contribution that began with a description of the wallpaper in the Committee Room and ended by discussing the sexual predilections of the Gladstone Cabinet and how it affected whores in London. Therefore, he can be an entertaining Member to have on a Committee and he will certainly be missed on the Committee dealing with the School Boards (Scotland) Bill.
I regret the motion that has been proposed by the Leader of the House. It weakens and undermines the right of representation of Scottish hon. Members. I should have hoped that that view could have been shared by Scottish Conservative Members. I am new to the House, but I understand that the Standing Orders have been framed partly to facilitate the passage of Government business through the House but equally to ensure that minority interests are protected in the House. It grieves me to say so, but in the short time I have been here, it seems that Scottish interests are minority interests. I have heard ad nauseam from Conservative Members the argument about the fact that we are a unitary Parliament and act as a unitary Parliament. However, with only 71 Scottish Members in a 650 Member House, that, by definition, means that Scottish interests are minority interests. Therefore, it is all the more important that we protect Scottish interests through the Standing Orders.
Where those Standing Orders have been established to protect Scottish interests, they should not be abandoned lightly as they are in the motion. The motion would amend Standing Order No. 86 and reduce the minimum number of Scottish Members from 16 to 15 on an important Scottish Standing Committee. I hope that all hon. Members who are genuinely interested in protecting Scottish interests in this place will not support the motion and will vote against it with the Opposition.
I understand the difficulties that have been caused by the illness of the hon. and learned Member for Perth and Kinross. However, we cannot allow his illness to influence our voting on this important matter. I spoke earlier today to a noble Lord who was a Member of the House of Commons during the Labour Government of 1974–79. He explained that the majority under which that Labour Government had to operate could vary from four to one. Therefore, they were always on a tight edge as to whether they would get their legislation through. He explained that no consideration was given by the Conservative Opposition to the illnesses that afflicted Labour Members. He recalled Labour Members who had suffered serious heart attacks. Indeed, my hon. Friend the Member for Paisley, South (Mr. Buchan) found himself in that position. The Tory Opposition Whip insisted that those hon. Members be brought by ambulance to this place so that he could ensure that they were present when Divisions took place. They showed no consideration for the medical condition of some Labour Members, and I do not think that we should allow the medical condition of the hon. and learned Member for Perth and Kinross to affect our decision on this issue. If it was right that the Labour Government of 1974–79 had to get their business through under the Standing Orders, that should apply to the Government today, with their majority of more than 100.
Reference has been made several times to the fact that an offer has been made by the Leader of the House to the Opposition that we can have one additional member on the Committee and that that member may come from any political party on the Opposition Benches. However, the price that has to be paid for that concession is the addition of two English Members to the Committee. May I draw the Leader of the House's attention to the fact that that would mean that the Government majority on the Committee would increase to four and that there would be an extension of English influence on what is an exclusively Scottish Bill.
I do not have to remind the Leader of the House of the presence of my hon. Friend the Member for Falkirk, West (Mr. Canavan) and of the exception that he has taken in the past to interference by English Members in exclusively Scottish matters. Indeed, he disrupted a Standing Committee, on which I served, to show his disagreement. When my hon. Friend took that disruptive action, he had the backing of Labour Members serving on the Committee. It is outrageous that English Members should be drafted on to a Committee to interfere in specific Scottish legislation.
We have heard contradictory speeches from Conservative Members. The hon. Member for Eastwood (Mr. Stewart) said that English Members serving on Scottish Standing Committees only vote and make no other contribution. The Leader of the House assured us that the hon. Member for Wanstead and Woodford (Mr. Arbuthnot) had made an important contribution to the Housing (Scotland) Bill. I sat through 100 hours of debate in that Committee, and if he did I failed to notice it. His contribution was on a par with that of the hon. Member for Angus, East (Mr. Welsh) on the Health and Medicines Bill. In nearly 100 hours of debate, he contributed only

about 12 minutes. The hon. Member for Wanstead and Woodford contributed a great deal less during the 100 hours of the Housing (Scotland) Bill.
It is important to recognise that Scottish Members object to Scottish Committees being influenced and interfered with by English Members who have no direct influence on them. We are keen to ensure that Scottish representation on Committees is defended.

Mr. Foulkes: Does my hon. Friend agree that, although one or two hon. Members have referred on a number of occasions in the debate to a unitary Parliament, this is a Parliament of the union of the two Parliaments of England and Scotland? Scottish legislation. which was transferred from the Scottish Parliament to this one, is in a special position in this Parliament of the United Kingdom.

Mr. McAllion: My hon. Friend makes a fair point. I wish that Conservative Members could get into their thick heads the fact that Scotland is not trapped in the Union. Scotland decides to be part of the Union but, equally, it can decide not to be a part of it. If the Government continue to deal with Scottish affairs in the way that they have since last June, Scottish people may decide that it is no longer in their interests to be a part of the Union.
The Government's record on Scottish affairs since the election last June is appalling. They have failed to set up a Scottish Select Committee. With 370 Conservative Members, they cannot find five who are sufficiently interested in Scotland to serve on the Scottish Select Committee. The Scottish Grand Committee is supposed to meet at least six or perhaps 12 times a year. In the last year it has met once, and that was because the hon. Member for Stirling (Mr. Forsyth) thought that there was some capital on education matters to be made out of it before the local government elections.
Scottish Question Time has become a mockery as time and again English Members deliberately disrupt it. The Housing (Scotland) Bill and the School Boards (Scotland) Bill are being disrupted. The Government do not give a damn for the people of Scotland or Scottish affairs. It is time that Scottish Members stood up for Scotland instead of following their Whips' advice and the kind of motion that is before the House.

Mrs. Margaret Ewing: On a point of order, Mr. Deputy Speaker. The hon. Member for Dundee, East (Mr. McAllion) said that my hon. Friend the Member for Angus, East (Mr. Welsh) had spoken for only 12 minutes in a total of 100 hours debate on the Health and Medicines Bill. My hon. Friend was not a member of that Committee, but he spoke on Second Reading, on Report and Third Reading. Perhaps the hon. Member for Dundee, East will withdraw his remark.

Mr. McAllion: I based my remarks entirely on comments that appeared in the Scottish press. If the hon. Lady would prefer, I could refer to the Standing Committee on the Local Government Act 1988 to which the hon. Member for Angus, East (Mr. Welsh) made a small contribution. He missed a Division relating to the exemption of Scotland from the provisions of the Local Government Act 1988.

Mrs. Ewing: Further to the point of order, Mr. Deputy Speaker. The hon. Member for Dundee, East (Mr. McAllion) initially referred to the Committee on the Health and Medicines Bill. Will you, Sir, ask the hon.


Gentleman to withdraw his remarks, as my hon. Friend the Member for Angus, East (Mr. Welsh) was not a member of that particular Committee?

Mr. Deputy Speaker: Does the hon. Member for Dundee, East (Mr. McAllion) wish to clarify that point?

Mr. McAllion: There seems to be a discrepancy in my advice and the advice that I have just received from the hon. Member for Moray (Mrs. Ewing). I shall check my sources and report back to the House.

Sir Hector Monro: It is obvious from Opposition Members' exchanges that it would be quite impossible for them to agree to add members to the Standing Committee; they are constantly fighting among themselves.
First, I wish to send my best wishes to my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn). I spoke to him on the telephone the night before last and he was in good heart and longing to get back to sort out Opposition Members, yet again, when he is fit enough.

Mr. Buchan: On a point of order, Mr. Deputy Speaker. It seems to me that the hon. Member for Dumfries (Sir H. Monro) has come forward with a most interesting proposition from the Front Bench, albeit below the Gangway. Should we not now defer the proceedings of the Committee until the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) returns?

Sir Hector Monro: It is a pity that the hon. Member likes to proceed by means of points of order rather than debate.
As I was saying, it is strange that the Opposition should be sold on the numbers game. If they cast their minds back—perhaps further than they might wish—they will remember that the Standing Committee was originally the whole of the Scottish Grand Committee with added members. It was a Whips' nightmare to try to whip 35 or so hon. Members on each side and maintain a majority. In the 1960s, a Labour Government were happy to have a Standing Committee of 32, which subsequently became 16. There is no particular reason why the number should be 16, 18, 20 or anything else; it should be for the convenience of the House.
It is also important to remember that the squabbling Opposition had the opportunity to have a Standing Committee of 20 members. All those Opposition Members who wanted to serve on the Committee could then have had their names added. They would then have had an opportunity to participate in the debates in the Standing Committee. The important point to all of us who are members of the Committee is that the otherwise mediocre quality of Opposition Members' contributions would then have been enhanced. It could not have been worse; it must have been better. Opposition Members have missed a great opportunity to add two more members to the Standing Committee while still maintaining the balance of the parties.

Mrs. Margaret Ewing: The hon. Gentleman talks about offers being made to Opposition Members on the composition of the Standing Committee. Does he accept that no direct representations were made to the minority parties about the setting up of the Committee?

Sir Hector Monro: I presume that the hon. Lady has heard of the usual channels. The Liberal party likes to name a Chief Whip, when it has only one Whip. The Scottish National party also has a Chief Whip although it has only one Whip. They could all have co-operated and discussed the matter together with the usual channels. I am sure that they would then have had the opportunity to field an additional member of the Standing Committee.

Mr. Wallace: Will the hon. Gentleman give way?

Sir Hector Monro: The hon. Gentleman has made several speeches and many interventions. It is time that he sat down and let other people have a word. He may be the Scottish Chief Whip of the Social and Liberal Democrats, and the rest of them for all I know.
If only Opposition Members, of whatever party, could have coordinated their opposition—my goodness, it would add a little fun if they gave us something to attack—they could have added two more members to the Standing Committee and we should have added the same number on our side. All would have been perfectly in order and this debate would not have been necessary. Everything could have been sorted out quietly through the usual channels; but no, the Labour party wanted to make a great scene and song and dance. They have achieved nothing.

Mr. Wilson: Will the hon. Gentleman give way?

Sir Hector Monro: No, I am certainly not giving way to the hon. Gentleman; good Lord, no. Opposition Members turn up at debates. do not listen to them, expect to get in at short notice, and behave like Lord God Almighty. I shall not give way when we are reaching the end of the debate. If hon. Members opposite did not interrupt so much, another Opposition Member might have been called in the debate.
The important consideration is that we have put forward a motion to amend the Standing Orders. If hon. Members opposite had been prepared to co-operate and add extra members to the Standing Committee from their own parties, they would have had an opportunity to come in and join the debates on the Bill. From what we have heard in the past four sittings their members are sadly lacking in experience.
Therefore, I have every intention of supporting the motion because it is the right thing to do in the circumstances.

Mr. Dennis Canavan: I shall be brief, Mr. Deputy Speaker. I have listened carefully to what Conservative Members have said during the debate.
The hon. Member for Eastwood (Mr. Stewart) let the cat out of the bag. This is not just a little, inconspicuous motion laid before the House at dead of night; it is a very dangerous motion. The hon. Member for Eastwood said that we might have to take a more fundamental look at the problem and bring forward further measures later to deal with the situation. In other words, this changing of the goalposts will not end tonight. It will go on and on because of the increasing difficulties that the Government will face in their Scottish legislative programme.
It is not good enough for hon. Members to say that this is a unitary Parliament, that the Government have a majority in the House, and therefore they must have a majority on all Standing Committees, including Scottish


Committees. It is incumbent upon any Government to look at the various countries making up the United Kingdom and to take into account the differences in tradition and, indeed, democratic expression of Members representing the different countries of the Union. To say that this is a unitary Parliament within a United Kingdom and that therefore the Government must always have a majority on a Scottish Standing Committee is nonsense.
Let us suppose that the Government had been reduced to zero representation in Scotland, which is not beyond the bounds of possibility. All the Scottish Tory Members can fit into a couple of taxis at present. Some of them, such as the hon. Members for Edinburgh, West (Lord James Douglas-Hamilton) and for Stirling (Mr. Forsyth) and the right hon. Member for Ayr (Mr. Younger), got home by the skin of their teeth, so it is not inconceivable that the Scottish Tories might be down to zero representation in the House. Would they seriously argue in such a situation that this precious United Kingdom and the unity of this Parliament demand that in a Scottish Standing Committee there ought to be, say, nine English Tories and perhaps only six or seven Members representing Scottish constituencies? That is the logic of what some of them have said tonight. If that is what they are proposing, they are in a sense endangering the very unity of the United Kingdom that they claim to defend.
Although there is not a majority who wish to set up a Scottish state, many people in Scotland feel that this place is unwilling to respond to their legitimate demands for a devolved Scottish Parliament with legislative and economic powers and even to the smallest of their demands. Indeed, it changes the rules and shifts the goal posts time and again. I warn those Tory Members who come in here on the tap of the Whip, including those who have not even listened to the debate, that if they go into the Lobby in support of the motion, they will weaken the unity that they pretend to defend.

Question put:—

The House divided: Ayes 165, Noes 121.

Division No. 284]
[12.05 am


AYES


Allason, Rupert
Emery, Sir Peter


Arbuthnot, James
Evennett, David


Arnold, Jacques (Gravesham)
Fallon, Michael


Baldry, Tony
Farr, Sir John


Bennett, Nicholas (Pembroke)
Favell, Tony


Boscawen, Hon Robert
Field, Barry (Isle ot Wight)


Brandon-Bravo, Martin
Forman, Nigel


Brazier, Julian
Forsyth, Michael (Stirling)


Brooke, Rt Hon Peter
Forth, Eric


Carrington, Matthew
Fowler, Rt Hon Norman


Chope, Christopher
Freeman, Roger


Clark, Dr Michael (Rochford)
French, Douglas


Clarke, Rt Hon K. (Rushcliffe)
Garel-Jones, Tristan


Colvin, Michael
Gill, Christopher


Coombs, Anthony (Wyre F'rest)
Goodhart, Sir Philip


Coombs, Simon (Swindon)
Goodson-Wickes, Dr Charles


Cran, James
Gorman, Mrs Teresa


Currie, Mrs Edwina
Gow, Ian


Davies, Q. (Stamf'd &amp; Spald'g)
Greenway, John (Ryedale)


Davis, David (Boothferry)
Griffiths, Sir Eldon (Bury St E')


Devlin, Tim
Griffiths, Peter (Portsmouth N)


Dorrell, Stephen
Grist, Ian


Douglas-Hamilton, Lord James
Ground, Patrick


Dover, Den
Hamilton, Hon Archie (Epsom)


Durant, Tony
Hampson, Dr Keith


Dykes, Hugh
Hannam, John





Hargreaves, A. (B'ham H'll Gr')
Pawsey, James


Hargreaves, Ken (Hyndburn)
Porter, David (Waveney)


Harris, David
Portillo, Michael


Hawkins, Christopher
Price, Sir David


Hayes, Jerry
Raffan, Keith


Hayward, Robert
Raison, Rt Hon Timothy


Hicks, Mrs Maureen (Wolv' NE)
Redwood, John


Hind, Kenneth
Renton, Tim


Holt, Richard
Rifkind, Rt Hon Malcolm


Howarth, Alan (Strat'd-on-A)
Roberts, Wyn (Conwy)


Howarth, G. (Cannock &amp; B'wd)
Roe, Mrs Marion


Hunt, David (Wirral W)
Rost, Peter


Hunter, Andrew
Rowe, Andrew


Jack, Michael
Rumbold, Mrs Angela


Jackson, Robert
Ryder, Richard


Johnson Smith, Sir Geoffrey
Sackville, Hon Tom


Jones, Gwilym (Cardiff N)
Shaw, David (Dover)


Jones, Robert B (Herts W)
Shaw, Sir Michael (Scarb')


Jopling, Rt Hon Michael
Shephard, Mrs G. (Norfolk SW)


King, Roger (B'ham N'thfield)
Sims, Roger


Knapman, Roger
Skeet, Sir Trevor


Knight, Dame Jill (Edgbaston)
Smith, Tim (Beaconsfield)


Knowles, Michael
Speller, Tony


Knox, David
Spicer, Michael (S Worcs)


Lamont, Rt Hon Norman
Squire, Robin


Lang, Ian
Stanbrook, Ivor


Lawrence, Ivan
Stern, Michael


Lennox-Boyd, Hon Mark
Stevens, Lewis


Lester, Jim (Broxtowe)
Stewart, Allan (Eastwood)


Lightbown, David
Stewart, Andy (Sherwood)


Lilley, Peter
Summerson, Hugo


Lloyd, Peter (Fareham)
Taylor, Ian (Esher)


Lyell, Sir Nicholas
Thompson, Patrick (Norwich N)


MacGregor, Rt Hon John
Thorne, Neil


McNair-Wilson, P. (New Forest)
Thornton, Malcolm


Mans, Keith
Thurnham, Peter


Marshall, John (Hendon S)
Townend, John (Bridlington)


Martin, David (Portsmouth S)
Tracey, Richard


Maxwell-Hyslop, Robin
Twinn, Dr Ian


Mayhew, Rt Hon Sir Patrick
Waddington, Rt Hon David


Meyer, Sir Anthony
Wakeham, Rt Hon John


Miller, Hal
Walden, George


Mitchell, Andrew (Gedling)
Walker, Bill (T'side North)


Mitchell, David (Hants NW)
Waller, Gary


Monro, Sir Hector
Wardle, Charles (Bexhill)


Morrison, Hon Sir Charles
Watts, John


Moss, Malcolm
Wells, Bowen


Moynihan, Hon Colin
Wheeler, John


Neale, Gerrard
Whitney, Ray


Needham, Richard
Widdecombe, Ann


Nelson, Anthony
Wiggin, Jerry


Neubert, Michael
Wilshire, David


Newton, Rt Hon Tony
Wolfson, Mark


Nicholls, Patrick
Wood, Timothy


Nicholson, David (Taunton)



Page, Richard
Tellers for the Ayes:


Paice, James
Mr. David Maclean and Mr. Kenneth Carlisle.


Patnick, Irvine



Patten, Chris (Bath)





NOES


Abbott, Ms Diane
Campbell, Menzies (Fife NE)


Adams, Allen (Paisley N)
Campbell-Savours, D. N.


Allen, Graham
Canavan, Dennis


Armstrong, Hilary
Carlile, Alex (Mont'g)


Ashton, Joe
Clarke, Tom (Monklands W)


Barnes, Harry (Derbyshire NE)
Clay, Bob


Barron, Kevin
Clelland, David


Battle, John
Clwyd, Mrs Ann


Beckett, Margaret
Cook, Frank (Stockton N)


Beith, A. J.
Cook, Robin (Livingston)


Bermingham, Gerald
Cousins, Jim


Boyes, Roland
Cryer, Bob


Bray, Dr Jeremy
Cummings, John


Brown, Gordon (D'mline E)
Cunliffe, Lawrence


Brown, Nicholas (Newcastle E)
Dalyell, Tam


Bruce, Malcolm (Gordon)
Darling, Alistair


Buchan, Norman
Davies, Ron (Caerphilly)


Buckley, George J.
Davis, Terry (B'ham Hodge H'l)


Callaghan, Jim
Dixon, Don






Dobson, Frank
Marek, Dr John


Doran, Frank
Marshall, David (Shettleston)


Douglas, Dick
Marshall, Jim (Leicester S)


Duffy, A. E. P.
Martin, Michael J. (Springburn)


Eadie, Alexander
Maxton, John


Evans, John (St Helens N)
Michael, Alun


Ewing, Mrs Margaret (Moray)
Michie, Bill (Sheffield Heeley)


Fisher, Mark
Millan, Rt Hon Bruce


Flynn, Paul
Morley, Elliott


Foster, Derek
Mowlam, Marjorie


Foulkes, George
Mullin, Chris


Fyfe, Maria
Murphy, Paul


Galloway, George
Nellist, Dave


George, Bruce
Patchett, Terry


Golding, Mrs Llin
Pike, Peter L.


Graham, Thomas
Powell, Ray (Ogmore)


Grant, Bernie (Tottenham)
Prescott, John


Griffiths, Win (Bridgend)
Primarolo, Dawn


Grocott, Bruce
Quin, Ms Joyce


Haynes, Frank
Robertson, George


Henderson, Doug
Ross, Ernie (Dundee W)


Hinchliffe, David
Short, Clare


Hogg, N. (C'nauld &amp; Kilsyth)
Skinner, Dennis


Home Robertson, John
Smith, Andrew (Oxford E)


Hughes, John (Coventry NE)
Soley, Clive


Hughes, Robert (Aberdeen N)
Steel, Rt Hon David


Hughes, Sean (Knowsley S)
Taylor, Mrs Ann (Dewsbury)


Illsley, Eric
Turner, Dennis


Ingram, Adam
Wall, Pat


Jones, Martyn (Clwyd S W)
Wallace, James


Kennedy, Charles
Walley, Joan


Lamond, James
Wardell, Gareth (Gower)


Leadbitter, Ted
Wareing, Robert N.


Lestor, Joan (Eccles)
Welsh, Andrew (Angus E)


Lloyd, Tony (Stretford)
Wigley, Dafydd


Lofthouse, Geoffrey
Williams, Alan W. (Carm'then)


McAllion, John
Wilson, Brian


McAvoy, Thomas
Wise, Mrs Audrey


Macdonald, Calum A.
Young, David (Bolton SE)


McFall, John



McKelvey, William
Tellers for the Noes:


McLeish, Henry
Mr Allen McKay and Mr. Ken Eastham.


McTaggart, Bob



Mahon, Mrs Alice

Question accordingly agreed to.

Ordered,
That the proviso to paragraph (2) of Standing Order No. 86 (Nomination of standing committees) shall apply to the First Scottish Standing Committee in respect of the School Boards (Scotland) Bill with the substitution of the word `fifteen' for the word 'sixteen' in line 27 of the Standing Order.

PETITION

Immigration Bill

Mr. Jim Cousins: I wish to present a petition from 1,200 residents of Tyneside who are concerned about the implications of the Immigration Bill for people of black and other ethnic minority backgrounds, believing that the implementation of the Bill will be racist. They therefore ask the House to re-examine the Bill in the light of submissions from the Commission for Racial Equality and the Joint Council for the Welfare of Immigrants. I am happy, as an hon. Member concerned about the right to family unity of my constituents, particularly from India, Bangladesh, Pakistan and Hong Kong, to add my support to their petition.

To lie upon the Table.

Channel Tunnel

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ryder.]

Mr. Hugh Dykes: I welcome the opportunity tonight, Mr. Deputy Speaker, which was kindly fixed by your office at a late hour, to raise on the Adjournment of the House the question of the implications of Government policy on the development of the Channel tunnel. It is a subject of such continuing importance that no hon. Member would disagree with its being debated. I am grateful to you, Mr. Deputy Speaker, and to your officials who were instrumental in helping us to secure this Adjournment debate tonight. I am also grateful to the Minister for Public Transport for coming to the House at this late hour to answer some of the points that I wish to make in the time available to me.
Although this is an unusual Adjournment debate opportunity, the subject itself is not in any way unusual or esoteric. It is probably one of the most important subjects facing us in this country at present and for the next few years. I suppose that all major transport projects are in that category of importance and primordial significance for the nation, but this is the dramatic, epoch-making undertaking that we see developing in what appears to be a satisfactory way and has long since been settled in a treaty with the French, with the backing of private finance. It is a unique achievement and is much to be admired, even by those who originally believed that an element of public expenditure would also be required. This colossal exercise has been carried out with relatively great facility by the financial institutions of both countries and by the investing public.
It now appears that the two companies in the Anglo-French consortium are proceeding satisfactorily with their massive construction project. The real digging is about to take place. Although this is not a direct Government responsibility, I am sure that my hon. Friend monitors closely the progress made by the Transmanche consortium. He may, therefore, wish to refer to that aspect and say how he believes, from the British and French Governments' vantage point, the project is proceeding.
I recently visited the French end of the diggings, which was, in some ways, a historical visit. It was dramatic to see the commencement of the tunnel diggings on the French side, because, after all, the French started with the disadvantage of not having an original opening as we had from the previously aborted project. I am sure that the House will agree that the project is essential for a host of crucial reasons, particularly for this country and economically.
Perhaps I can crystallise those reasons by stating that this is a physical link to the continent. Those of us who welcome that link for a variety of reasons do not just welcome it as a transport project per se; it is a tremendously important psychological and physical link. It will be the end of this country being literally an island nation, although not of the robust aspects of our island history and tradition, but of the more positive aspects of our working as a part of an increasingly united European Community.
The project is also very important from a bilateral perspective because it brings France and Britain closer together, not simply because there will be a rail tunnel but


more in terms of the growing co-operation between the two Governments, no matter what the complexion of the French Government may be after the second round of the elections in a week or two. There will be growing co-operation between the two Administrations with all the things that the two countries need to do together in the EEC and other bilateral aspects.
The project is vital for the internal market in the EEC beginning in 1992 and launched by my right hon. and noble Friend Lord Young in another place. The project is a massive and dramatic development. This transport project, like other transport links that are much easier for our continental colleagues to achieve on land, is to be welcomed as part of the developing internal market. The transport and communications in that market will be almost as important as the intrinsic economic activity of manufacturing and services.
The project enhances the role of the railways. Like my hon. Friend the Member for Christchurch (Mr. Adley), I have not been content to see the railways downgraded. I do not believe that that has been the intention of Conservative Governments, but it has appeared to be the case. I am glad that the railways will have a tremendous boost and enhancement from this dramatic and exciting project.
All hon. Members are beginning to talk in the Tea Room and elsewhere about what I call the sudden congestion syndrome on overcrowded motorways. For example, the M25 is already over-full and we are talking about extra lanes for a road that was built only a few years ago. All the problems facing the major motorway networks, the A roads and the congestion in the south lead us to recognise that we must develop the railways, particularly on the crucial long distance routes, for freight and passengers.
The project will help the whole of the United Kingdom's economy. I think that I can say with confidence that it will not destroy the future of the ferries and hovercrafts. However, it will reduce their oligopolistic powers. That will be of crucial benefit to the public. I hope that a more immediate effect—and this is not part of the Adjournment debate tonight—is that the Dover dispute will be solved and that the National Union of Seamen will see the wisdom and sense of obeying the law and coming up to date with the modern practices proposed by a company that is not being oppressive in the way that the secretary of the NUS is trying to portray.
Other long-term developments will be very beneficial. Like others, I hope to see an end to duty-free goods which have provided enormous profits for the ferry operators and others, but have not been in the genuine public interest.
There are many aspects of this massive project that still cause interest and even anxiety about how it will shape up. As I said at the beginning of my remarks, although it is not a direct central Government responsibility, I hope that my hon. Friend the Minister will be able to give the Government's view on how the companies are faring in the consortium and how the Government, in so far as they have a relationship with that massive construction exercise on both sides of the Channel, will respond to the overtures and requests from the consortium for the necessary Government relationship for the success of that private

financial project which inevitably means Government involvement in the sense of the infrastructure surrounding the first ever Channel tunnel.
The Government's commitment is important. My hon. Friend the Minister has alluded to these matters on previous occasions and we have been grateful to him for what he has said. He appears to be the champion of a considerable commitment in future for all the things that come only within the purview of public finance and Government activity. It is time for us to reinforce and enhance those utterances that will underline the Government's commitment of infrastructural money. I hope that my hon. Friend the Minister will help me, my hon. Friends and others about the latest thinking on the need for a high-speed rail link. My hon. Friend may recall that even in the last week there have been important allusions made to that aspect by the British representatives and directors of the Channel tunnel consortium when they said that the railway problem must be resolved, and the sooner the better. There is little time left for those crucial decisions to be made. Still no decision has been made on the British side and the French, with their TGV operation, are apparently expressing concern and asking how the British Government intend responding.
I do not want to see a situation where our image is severely and adversely dented by passengers replete with stories of gliding at high speed from Paris to Calais, and then using the excellent Channel tunnel facilities that are now being planned, only to find themselves lumbering along at a painful 45 or 50 mph journey from Dover to London because we did not sort out the problems. That is a peril and a danger that faces us unless we come to grips with the matter.
How will that high-speed rail link be devised to ensure that the British TGV equivalent syndrome train will be satisfactorily deployed between Dover and London? I am sure that my hon. Friend will agree that the alternative would have a catastrophic consequence. That affects also the development of Waterloo station and how it will be linked with the planned massive property and rail head and with the new Underground station planned by British Rail at King's Cross, linking with St. Pancras. I believe that that will be the biggest single-property development in Europe—bigger, for example, than the planned development over the Quartier-Leopold station in Brussels.
That crucial question is reinforced by all the other comparisons being made with what is being spent on infrastructure by the French Government, admittedly in a development zone. We appreciate that that is a crucial difference. The French development is in a classic development zone which has suffered economic hardship, whereas ours is in the congested south-east.
I hope that my hon. Friends with constituencies in Kent, with whom we sympathise, will understand that, although they may naturally be worried about the environmental and human depredations that would come from large-scale development of high-speed rail links, and about what would happen as a result of the full development of Ashford International—which is supposed to be the future clearance centre—they cannot hold up the whole of that progress, as that would be detrimental to the interests of the rest of the United Kingdom's economy.
Also crucial is the need to ensure that we do that which the Government have been very successful at doing in other areas internally—perhaps not the elimination of


bureaucracy and officialdom in connection with the movement of passengers and freight through the Channel tunnel, but at least a reduction so that they are not a barrier to trade and to the progress of passenger through-trains or shuttles using the tunnel.
I recall the original research note in the Library dated 3 June 1986 in which reference was made to the Bill and to all the matters which flowed from it and to the treaty. In respect of the powers given, it made mention in paragraph 2 on page 8 of
provision being made under the Bill to make orders, subject to parliamentary consent, which would give customs, immigration and other officials who traditionally carry out checks at points of entry into the UK full powers of inspection and, as appropriate, of detention and seizure at the frontier post in France.
Anxiety about drugs and recent horrific terrorist events understandably make us feel reluctant to surrender those powers. However, if there is an excess of bureaucracy and officialdom—and the union of European Customs officials must be one of the strongest unions in Europe, although various national unions are linked together—that will have a self-defeating effect on the economic movement of freight, passengers, holidaymakers and leisure travellers through the tunnel. That would be very counter-productive and would give the whole venture a bad name.
I ask my hon. Friend to say what he feels will be the balance of advantages between the north and the south. I hope he will say that the tunnel will not be just a southern privilege but will have major positive effects on the northern parts of the United Kingdom's economy. With those remarks, I thank you, Mr. Deputy Speaker, for allowing me to initiate this brief Adjournment debate.

The Minister for Public Transport (Mr. David Mitchell): It is doubly appropriate that my hon. Friend the Member for Harrow, East (Mr. Dykes) should raise the subject of the Channel tunnel in this Adjournment debate. First, it is appropriate because he is a doughty supporter of the Common Market and closer European unity. There is no doubt that the tunnel will act as a great distance-shrinker and a powerful adhesive to bind together the economies of Britain and the Continent. Secondly, it is appropriate because he has chosen the right moment to invite me to take stock of progress on the Channel tunnel's construction and of the likely consequences when it opens.
My hon. Friend will, I think, be glad to know that the total value of orders on offer from the purchasing arm of the tunnel contractors, and for British Rail rolling stock, is not far short of £1,000 million. The regions, particularly Scotland and the north, have done very well in securing a major share of the orders, not least in Glasgow. I am sure that that will be warmly welcomed by many hon. Members.
Construction is now pressing ahead. The distances under the English Channel achieved by the first Beaumont tunnel, which was started by the London and South-Eastern railway, and that by the second, abortive 1973 tunnel, have both been exceeded, and drilling is progressing further out under the Channel, towards the French coast. No one need now doubt that in due course the French and British tunnels will be safely linked.
When the Channel tunnel opens for business in 1993 it will be complemented by a superb system of access roads. I think that my hon. Friend will be interested to know, as

no doubt will other hon. Members, just how comprehensive that access road network will be. The M20 is to be widened at Maidstone, and the gap to Ashford is to be filled. As a result, a three-lane motorway will stretch front the M25 to the mouth of the tunnel.
Sections of the M25 are being improved, and we are pressing ahead with legislation for the new Dartford-Thurrock bridge, which— like the Channel tunnel—will be a product of private enterprise. For local roads in Kent we have so far accepted six Channel tunnel-related schemes from Kent county council for transport supplementary grant. They are expected to cost £34 million in total. In that connection, it may be appropriate to pay tribute to the work done by Councillor Michael Odling, chairman of the transportation resources committee of Kent county council, who has certainly been a tough negotiator—on behalf of his county council—with my colleagues and me in the Department of Transport, making certain that Kent has fully honoured the undertakings given on ensuring that its own county programme did not suffer as a result of the urgent needs for road access to the Channel tunnel.
All in all, the business communities—large and small—and their representatives, ranging from the CBI to the Small Business Bureau, can feel fully reassured that access to the tunnel by road will be fast, safe and economic. I am glad to have the opportunity to put those facts on the record.
What about rail access? My hon. Friend raised a number of pertinent questions. I can give the House only a part of the story, but the part itself is reassuring. The Government have given British Rail approval in principle to spend £550 million—£250 million on rolling stock and about £300 million on infrastructure. British Rail is satisfied that when the tunnel opens in 1993 there will be sufficient capacity to meet the obligations that it has undertaken with SNCF.
Of course, as in so many rail operations, there will be two peaks. However, as the journey from Paris to London takes about three hours, and the journey from Brussels to London about two and three quarter hours, people catching trains on the continent between 6 am and 7 am will arrive after the peak of commuter services coming into London in the morning. In the afternoon there is more difficulty, more congestion and a greater desire by everyone to leave at the same time. However, it will be possible for British Rail, by using more than one route from London to Folkestone, to achieve what is required at the time of opening.
My hon. Friend rightly raised the question of what happens when traffic builds up. Hon. Members will know that I chaired a joint consultation committee which meets in Kent and consists of members of Kent county council, the district councils involved, the Departments of Employment, Environment and Transport together with British Rail, the Channel tunnel promoters and TML, which is carrying out the construction. This committee looks at the problems and the opportunities, and at how to maximise the opportunities for Kent and minimise the disadvantages.
The committee set up a special impact study team, which has now reported. It examined the impact of the tunnel on rail services in Kent, and it concluded that by the mid-1990s there will be no capacity between London and the tunnel for further growth in commuter traffic or for the progressive development of international services. The


study noted that British Rail is already engaged in a detailed assessment of options for augmenting route, seating and terminal capacity.
I have asked the board to let me have the result of its assessment in June this year. It is using outside consultants to assist in the study, and my hon. Friend will be as keenly interested as I am to see the results of that study when they are received in June. I should like to speculate on what the report might contain, but there has been enough speculation already and it might be better if we wait for the report in June and consider it on its merits. I have no doubt that the Transport 2000 conference which is taking place in York on 17 June will provide an opportunity for taking stock of the options.
I turn from the construction of the tunnel and the developments that one can foresee as being necessary to say something about the tunnel in operation, in answer to the points made by my hon. Friend. As he rightly observed, there are now limited choices for those who wish to cross the Channel. One can go by air, which is expensive. Indeed, when one compares an air fare to New York by Virgin Atlantic Airways with the air fares to some European destinations, one gets an uncomfortable feeling that liberalisation in Europe still has a long way to go in achieving for the customer the benefits of competition in air services, and Channel ferry services make it the most expensive international waterway per mile in the world.
As my hon. Friend will know, the cornerstone of the Government's transport policy is to provide choice and competition, because they are the customer's best friends, and that applies not only in a multitude of transactions in which we are customers, but to transport services.
One of the benefits of the Channel tunnel will be that those two choices of going by air or sea will become four choices. People will be able to drive down the three-lane motorway to the tunnel entrance, put their cars on a shuttle and be whisked through the tunnel in half an hour. Coaches will no doubt do the same, providing an inexpensive form of transport for many thousands of people, fanning out over the European continent, and bringing large numbers of tourists from the continent to visit many of Britain's attractions, some of which are too little known. There is still much to be done to make them known to the wider continental market.
Secondly, and more fundamentally, there is the direct rail link for passengers from Waterloo to the Gare du Nord in Paris, or to Brussels, and that rail link will connect into the Paris, Brussels, Amsterdam and Cologne network of high-speed trains throughout Europe.
There will be two principal categories of beneficiaries in Britain. First, there will be those who travel to the continent by shuttle and onwards by Motorail or high-speed electric trains. British Rail forecast that the number of passengers travelling through the tunnel will be between 13·4 million and 15·9 million in 1993, going up to 17·4 million to 20·8 million in 2003.
Secondly, it is in the carriage of freight that the greatest benefits will come to our economy. There will be substantial benefits to manufacturers, particularly in the north. My hon. Friend asked me about the way in which I saw such benefits coming. Nearly 65 per cent. of our exports go to the continent. It is expected that British Rail will move between 6·1 million and 7·2 million tonnes by rail in 1993, and that that will go up to between 7 million and 11·5 million tonnes by 2003.
What is fascinating is that, although there have been environmental "disbenefits", particularly in the Folkestone area, where the terminal will be located, one of the profound benefits is that once British Rail is linked into the continental rail system it will be able to compete effectively with the roads on the longer distances that rail will provide. British Rail expects that no fewer than 1,500 juggernauts a day will be taken off the roads on to the rail system, with substantial benefits for those who live alongside the roads so relieved.
I say clearly and emphatically that British exporters in the north of Britain suffer enormously from the disadvantage of distance and the Channel tunnel will be the big distance shrinker. They will be put on comparative terms when competing with their continental competitors who have land frontiers when the rail link connects all the major industrial areas of Britain to their customer areas on the continent. That is something to which we should all look forward, particularly the people in the north.
I thank my hon. Friend for raising this subject on the Adjournment, even at this late hour, and giving me the opportunity of reporting progress. I hope that he will feel pleased with the progress that I have been able to report tonight.

Question put and agreed to.

Adjourned accordingly at. fifteen minutes to One o'clock.